Australian Dollar to New Zealand Dollar Exchange Rate Struggles to Hold Gains as Australian Inflation Disappoints
While the New Zealand Dollar (NZD) weakened earlier in the week, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate’s strength has been limited due to some disappointing Australian inflation data published on Wednesday.
Since the fall from its highs of 1.0985 last week, AUD/NZD has been trending closely to the level of 1.0900 again. AUD/NZD ended last week trending at around 1.0904 and at the time of writing trended in the region of 1.0898.
A brief jump in demand for the Australian Dollar to New Zealand Dollar exchange rate on Wednesday was short-lived, as the ‘Aussie’ quickly weakened again following Australia’s latest inflation report.
The data left the Australian Dollar (AUD) unappealing, but the New Zealand Dollar was unable to capitalise due to its own weakness. This essentially left AUD/NZD trending closely to the week’s opening levels.
Australian Dollar (AUD) Exchange Rates Fall Limp as Australian Inflation Falls Short
The Australian Dollar’s worst performance may be yet to come, according to some analysts, as the recently embattled currency was knocked lower once again on Wednesday as investors reacted to the latest Australian data.
Wednesday’s Australian Consumer Price Index (CPI) inflation rate report was the biggest dataset of the week for Australian Dollar to New Zealand Dollar exchange rate investors, and ultimately disappointed.
Australian inflation was forecast to have edged higher from 0.4% to 0.5% quarter-on-quarter in Q2, but instead remained at 0.4%. The yearly figure failed to advance to the forecast 2.2% and instead only edged higher from 1.9% to 2.1%.
While the Reserve Bank of Australia’s (RBA) trimmed mean inflation figures all met forecasts, the primary inflation figures were disappointing enough to weigh on RBA interest rate hike bets.
As it stands, markets do not expect the RBA to act at all on Australian interest rates until next July at the earliest, and following Wednesday’s report all RBA rate hike bets weakened slightly.
New Zealand Dollar (NZD) Exchange Rate Demand Limited as New Zealand Trade Balance Weakens
While the New Zealand Dollar benefitted from weakness in the Australian Dollar on Wednesday, ‘Kiwi’ demand was still limited due to a lack of its own domestic support.
This week’s most influential New Zealand data was published on Wednesday too, in the form of New Zealand’s June trade balance results.
The data worsened concerns about how New Zealand’s economy may weather a potential global trade war, as the trade balance and export results all came in well below expectations.
New Zealand’s trade balance was forecast to print at a surplus of N$200m in June, but instead unexpectedly fell to a deficit of N$-113m. The export figure was forecast to come in at N$5.06b but unexpectedly slowed to N$4.91b.
Australian Dollar to New Zealand Dollar (AUD/NZD) Forecast: Australian Export Data Ahead
With US-China trade jitters impacting both the Australian Dollar and New Zealand Dollar, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is likely to remain range bound unless some domestic data surprises investors.
The remainder of this week’s data is unlikely to be particularly influential, but could still help AUD/NZD to push higher again if it impresses investors.
Thursday will see the publication of Australia’s Q2 export and import price results, followed on Friday by Australia’s Q2 Producer Price Index (PPI) figures.
New Zealand’s consumer confidence survey for July, from Roy Morgan, will be published on Friday too.
Developments regarding US protectionism and the US-China trade spat could influence AUD/NZD too, but are also likely to impact both currencies.
News regarding iron ore commodity trade, however, is likely to impact the Australian Dollar more than the New Zealand Dollar.