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Australian Dollar to New Zealand Dollar Exchange Rate Recovers on RBA Financial Stability Review

Australian Dollar Exchange Rates

Australian Dollar to New Zealand Dollar Exchange Rate on Track to Avoid Major Losses

While the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate spent most of the week trending lower, the pair recovered most of its losses on Friday and continued to recover during the European session.

Thanks to a lack of impressive New Zealand data as well as a relatively optimistic financial stability review from the Reserve Bank of Australia (RBA), AUD/NZD recovered from an eight-month-low of 1.0489 to near the week’s opening levels of 1.0553.

Demand for the Australian Dollar (AUD) improved on Friday, following the RBA’s latest financial stability review. The review showed that while there were still risks and dangers, households were coping better with financial stresses.

Household borrowing risks had also eased and the outlook had overall improved. This made the Australian Dollar more appealing on hopes that Australia’s economy was still more likely to need an interest rate hike than a cut.

Australian Dollar (AUD) Exchange Rates Supported Further by Trade News

As the Australian Dollar took a bigger hit from the latest global trade uncertainties and jitters than the New Zealand Dollar (NZD) did, it has seen a stronger recovery from the late-week boost to risk-sentiment.

Concerns about the possibility of a ‘trade war’ between the US and China have taken a backseat in recent sessions as US geopolitical uncertainties have taken headlines instead.

‘Trade war’ fears were also abated slightly by a speech from China’s President earlier in the week.

As China is Australia’s biggest trade partner, the Australian Dollar benefits more strongly than the New Zealand Dollar from positive Chinese trade news.

New Zealand Dollar (NZD) Held Back by Underwhelming NZ Business Data

A lack of strong New Zealand data in the past week, as well a recovering Australian Dollar, made it difficult for the New Zealand Dollar to sustain any gains.

Monday’s Q1 New Zealand business confidence data from NZIER only improved slightly from -12% to -11%, while March’s NZ business PMI slipped from 53.4 to a low 52.2.

The only other New Zealand data published this week was NZIER’s Q1 capacity utilisation report, which rose from 92.8% to 93.5%.

Still, New Zealand Dollar performance is still generally strong – it was just weaker than the ‘Aussie’ on Friday.

Australian Dollar to New Zealand Dollar (AUD/NZD) Forecast: Key Data due Next Week

Next week’s Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate trade could be busier, as more key Australian and New Zealand datasets will be published throughout the week.

The Reserve Bank of Australia (RBA) will publish its latest meeting minutes on Tuesday, which could give investors a better idea of how the bank feels about Australia’s economic outlook.

However, most of the week’s most influential ecostats will be published on Thursday. Australia’s March job market results will be published on Thursday, as well as New Zealand’s key Q1 Consumer Price Index (CPI) results.

If Australia’s job stats beat expectations, the RBA may become more optimistic about the health of Australia’s economy.

On top of data, trade news will of course continue to drive AUD/NZD next week.

Any developments on US and Chinese trade could influence the Australian Dollar, while the New Zealand Dollar could be influenced by the Global Dairy Trade’s (GDT) second April dairy auction.