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Australian Dollar to New Zealand Dollar Exchange Rate Investors Await Australian Inflation Stats

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Australian Dollar to New Zealand Dollar Exchange Rate Flat Ahead of Key Wednesday Data

Since markets opened this week, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate has trended within a tight range as investors anticipate major news due on Wednesday.

AUD/NZD movement has been limited in recent weeks as the pair only edged higher from 1.1000 to 1.1030 last week. This week so far the pair has remained near the level of 1.1030.

As neither the Australian Dollar (AUD) nor New Zealand Dollar (NZD) have been notably influenced by recent economic data, and recent US news affecting risk-sentiment has impacted both currencies, investors are awaiting Australia’s Q4 inflation report.

Australian Dollar (AUD) Exchange Rates Little-Changed by Recent Data

The most notable Australian dataset in over a week was published on Tuesday, but fell slightly short of forecasts. As a result the Australian Dollar’s strength remained limited as investors awaited Wednesday’s inflation stats.

NAB’s Australian business confidence survey from December was forecast to double from 6 to 12, but only rose from a revised 7 to 11.

Analysts noted that overall, the business outlook was looking brighter. According to Alan Oster, NAB chief economist;

‘The jump has reversed the downward trend that had been apparent since around mid-2017,

This has helped to narrow the perplexing gap between business conditions and confidence evident over the past couple of years, and is an encouraging signal for investment.’

However, the confidence figure was weighed by a disappointing Christmas period for Australian retailers. According to the NAB report;

‘Final retail prices also weakened sharply in December into negative territory, and are running at a slower rate than labour costs and purchases costs, pointing to margin compression,’

New Zealand Dollar (NZD) Avoids Losses as NZ Trade Report Beats Expectations

The New Zealand Dollar held its ground against the ‘Aussie’ on Tuesday, despite last week’s disappointing NZ inflation report, thanks to news that New Zealand’s trade balance had unexpectedly printed a surplus.

New Zealand’s December trade balance was forecast to lighten to N$-125m but instead rose to N$640m. This was the biggest monthly surplus in over two years and the highest for a December on record.

It was due to a surprise jump in exports amid higher values in dairy-related products, which are New Zealand’s most lucrative commodity.

Australian Dollar to New Zealand Dollar (AUD/NZD) Investors Anticipate Australia’s Inflation Report

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate could see a notable shift in demand on Wednesday, depending on the results of Australia’s Q4 Consumer Price Index (CPI) results.

Australian inflation is forecast to have accelerated from 0.6% to 0.7% quarter-on-quarter and from 1.8% to 2% year-on-year.

If Australian inflation beats expectations, it could boost market speculation that the Reserve Bank of Australia (RBA) could be pressured into hiking Australian interest rates sooner than currently expected.

On the other hand, underwhelming inflation data would leave the ‘Aussie’ unappealing and AUD/NZD could fall in the coming days.

Other data with the potential to influence AUD/NZD includes Australia’s manufacturing PMI from AiG and December building permits on Thursday. New Zealand’s own December building permits data will be published on Friday.