Limited Signs of RBA Action Leave AUD/NZD Exchange Rate Tight Today
The latest data has come from the Reserve Bank of Australia (RBA), which has released minutes from May’s meeting.
AUD traders have been disappointed for the most part, as the data showed that RBA policymakers don’t seem inclined to make any immediate adjustments.
Westpac Research Analyst Bill Evans has considered the implications of the minutes and said:
‘If anything, these minutes seem to imply even greater patience with the current policy of steady [interest] rates.
‘The minutes note that “it would be appropriate to hold the cash rate steady and for the [RBA] to be a source of stability and confidence”.
‘The Bank continues to be quite relaxed about the Australian Dollar noting that “it had remained in a narrow range over the previous two years relative to the US dollar.”’
Optimistic Forecast from RBA Deputy Governor Fails to Trigger AUD/NZD Rally
In other news, RBA Deputy Governor Guy Debelle has given a speech, but this hasn’t caused an Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate rally.
Mr Debelle has been broadly positive in his outlook, stating that Australia is capable of meeting or even exceeding GDP growth forecasts set out in the 2018 budget.
Not everything was positive, however; Mr Debelle also cautioned that US economic expansion could have a negative impact on the Australian Dollar:
‘The US fiscal stimulus is still to have its full effect in an economy that … is very close to full capacity.
‘This is a similar situation to that in the late 1960’s and could lead to more inflation in the US than currently anticipated.
‘In turn, that could lead to more tightening in monetary policy than currently expected.’
This specifically implies higher US interest rates over 2018, which may strengthen the US Dollar and cause Australian Dollar losses.
New Zealand Dollar to Australian Dollar (NZD/AUD) Exchange Rate Positive despite Pessimistic Budget Forecast
Despite a limited amount of economic news, the New Zealand Dollar (NZD) has still risen against the softer Australian Dollar (AUD) today.
This positive performance comes despite reports that a significant proportion of NZ businesses believe the 2018 budget will harm the economy.
Business advisory company Staples Rodway conducted a survey with almost 500 NZ business leaders and over half had a negative forecast for this year’s budget.
Examining the survey findings, Staples Rodway analysts said:
‘The biggest priority was balancing the books.
‘This indicates that if the Budget cannot reassure businesses that the Government won’t be adding to Crown debt, business confidence will fall further.’
Australian Dollar to New Zealand Dollar Exchange Rate Forecast: Will AU Jobs Data Boost AUD?
Looking ahead, the next major Australian economic data will be employment stats out on Thursday.
These are tipped to show higher overall employment levels, in addition to more people in full-time employment.
The Australian Dollar (AUD) might rise against the New Zealand Dollar (NZD) on such news, as it would raise the chances of higher wage growth in the future.
More immediately, the New Zealand Dollar could be affected by this afternoon’s Global Dairy Trade price index results.
If these show a rise in global dairy prices then the NZD/AUD exchange rate could advance, as such a result would benefit NZ exporters.