The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate commenced the week by advancing approximately half a percent yesterday however, it gave back all the ground it made overnight to continue on its’ recent declination trend. The AUD/NZD exchange rate currently trading around all-time record low levels and there appears to be little evidence to suggest that the recent trend is likely to reverse in the near future.
Yesterday the New Zealand economy reported a 6.2% increase to their annualised credit card spending, a 1.7% increase from the 4.5% previous reading. Today the Reserve Bank of New Zealand (RBNZ) will release their first quarter 2 Year Inflation Expectation. The previous release showed the expectation to be at 2.1% and lower global inflation is likely to weigh down on this figure.
It is a fairly quiet week for domestic economic data releases out of Australia with only lower tier releases expected. Today’s Australian releases are concerned with consumer confidence and Skilled Vacancies whilst tomorrow’s announcements will be reporting on Construction Work Done as well as the changes to Australian wages in the form of the Wage Cost Index.
Chinese Manufacturing Purchasing Managers Index (PMI) is likely to have more influence on the value of the ‘Aussie’ (AUD) tomorrow. The forecast suggests a continued slowdown of the Chinese economy, with the contraction figure of 49.5 expected. A result higher than the forecast may provide a lift in the AUD/NZD exchange rate, whilst a result lower than the forecast could continue the recent trend of the AUD/NZD exchange rate falling.
Governor Graeme Wheeler, Head of the Reserve Bank of New Zealand (RBNZ) will be making a speech at the Finance Select Committee tomorrow which is likely to be influential to the value of ‘Kiwi’ (NZD).
Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Forecast
The overall trend of the AUD/NZD exchange rate declining has been the result of a combination of various factors. Rising interest rates and a construction boom in New Zealand, combined with falling interest rates in Australia and a sharp fall in commodity prices can be attributed to the trend. Looking forward, the AUD/NZD exchange rate appears to be lacking any clear economic indicators to look towards for a significant lift in the short-term.
On Thursday New Zealand will announce their January trade Balance figure, which is expected to remain around the current level of -159M. Following the release from New Zealand, Australia will report on Private Capital Expenditure in which the forecast suggests a decrease of purchases of new capital to the tune of -1.4% from the previous 0.2% result. Both of these releases fail to provide the ‘Aussie’ (AUD) with the likelihood of making gains on the ‘Kiwi’ (NZD).
The next major movement in the AUD/NZD exchange rate may occur next Tuesday when the Reserve Bank of Australia (RBA) announce their rate decision for the month of March. Although the RBA Minutes indicated last week that the governing body probably brought forward the interest rate cut expected for March to February, many economists still believe a further interest rate cut may occur, leaving the AUD/NZD in a continued state of vulnerability for further declines.