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Record Australian Confidence Score Pushes AUD/NZD Exchange Rate Up

Australian Dollar Exchange Rates

Australian Dollar to New Zealand Dollar Exchange Rate Rises on Higher Confidence

The Australian Dollar to New Zealand Dollar exchange rate has risen by 0.4% today, while elsewhere the AUD has also advanced against the Euro, Pound and US Dollar.

This strong performance comes from the release of the ANZ-Roy Morgan weekly consumer confidence index for the previous week, where the score has risen to a 4-year high.

Data-wise, the previous 122 point reading rose to 123.5 points. Responding to the news, ANZ Bank Head of Australian Economics David Plank said;

‘The rise in confidence is quite encouraging and is consistent with the positive data out on building approvals and retail sales.

Last week, we noted a positive seasonal bias to the first reading of the year.

There is no clear seasonal bias in the second week, suggesting that the improvement in confidence this year may be more than just an empty resolution’.

Falling Iron Ore Prices Highlight Continued Threat to AUD/NZD Exchange Rate

While the Australian Dollar has been in high demand today, the currency remains vulnerable to fluctuations in the price of a nationally important commodity, iron ore.

Monday saw a notable decline in prices, which was attributed to Chinese inventories for iron ore being relatively high.

Full inventories in China reduce the need for iron ore from Australia, which in turn means reduced overall prices for the commodity.

Commenting on the situation, Shougang Group Chairman Jin Wei said;

‘Iron ore supplies kept rising and port inventories kept testing records, while scrap supplies are also increasing, so there is no basis for iron ore prices to sustain gains’.

If iron ore prices continue to fall, confidence in the Australian Dollar could decrease in the near-term.

Falling Business Confidence Drags NZD/AUD Exchange Rate Lower

Signs of uncertainty among NZ businesses have damaged the New Zealand Dollar today, with the currency losing ground to the Australian Dollar and other peers.

The New Zealand Institute of Economic Research (NZIER) has stated that 12% of firms expect worse future business conditions, compared to a 5% hoping for an improvement.

Explaining the reasoning behind this decline, NZIER Principal Economist Christina Leung said;

‘Businesses may be worried about the outlook for the New Zealand economy under the new Labour-led government, but for now that is not reflected in demand in their own businesses’.

New Zealand was previously led by the National Party from 2008-2017, so coming to terms with a Labour-NZ First leadership could take some time for NZ business owners.

Australian Dollar to New Zealand Dollar Exchange Rate Forecast: Major Confidence Stats Incoming

Following the recent ANZ-Roy Morgan confidence reading, the Australian Dollar could next be influenced by Wednesday night’s Westpac consumer confidence index.

Unlike the ANZ-Roy Morgan reading, this is tipped to show a slight decline in January.

The reading is considered high-impact, so could result in Australian Dollar losses if forecasts are accurate.

The next significant New Zealand news will be out this afternoon, in the form of the Global Dairy Trade price index.

This measures changes in dairy prices and could cause an NZD rally if it shows major growth in global dairy costs.