Australian Dollar Appreciates despite Limited Support from Economic Outlook
Australian economic news has been uninspiring today, with only greater New Zealand Dollar weakness enabling an advance in the pairing.
Australia’s main data has been the Westpac leading index for September, which has shown a tepid 0.1% rise.
The index serves as an overall snapshot of Australian economic growth, so has not been received with wild enthusiasm by AUD traders.
Commenting on the unimpressive implications of the index was Bill Evans, Chief Economist at Westpac. Mr Evans said;
‘While the index only gives us a glimpse of the likely momentum in the first few months of 2018 it is consistent with our view of the likely growth environment next year’.
New Zealand Dollar Battered by Further Drop in Dairy Prices
The New Zealand Dollar has seen a -0.3% decline against the Australian Dollar today, following a poor reading on global dairy prices.
On Tuesday, the Global Dairy Trade price index declined by -1%, following a previous -2.4% drop in early October.
The NZD has also been weakened by political news, concerning the makeup of the next government.
After a number of delays and setbacks, NZ First leader Winston Peters has stated that he will ‘make an announcement’ on Thursday afternoon.
Peters leads the third largest NZ political party, so is in the position to form a functioning coalition with the Labour Party or the Nationals.
He has given no indication of preference either way, so there is a chance of an NZD crash if Peters picks Labour.
While the party has governed before, the last time was in 2008; a win for the Nationals would keep the status quo intact.
Will Australian Dollar Surge on Unemployment Rate Results?
Apart from Peters’ declaration, the other big news on Thursday will be Australia’s September unemployment rate figures.
The overall unemployment rate isn’t expected to shift from 5.6%, but if employment rises then the Australian Dollar could still appreciate.
Crucially, economists predict higher full-time employment than part-time employment, which is seen as a good sign of economic growth.
If Peters doesn’t actually announce which party he is choosing tomorrow, the New Zealand Dollar could lurch down because of disappointed traders.
Recent Interbank AUD NZD Exchange Rates
At the time of writing, the Australian Dollar to New Zealand Dollar (AUD NZD) exchange rate was trading at 1.0976 and the New Zealand Dollar to Australian Dollar (NZD AUD) exchange rate was trading at 0.9107.