AUD/NZD Exchange Rate Climbs on Hints of End to Slow AU Wage Growth
These forecasts have come from Deloitte Access Economics Partner Chris Richardson, as well as independent economist Saul Eslake.
Both anticipate an improvement in pay packets for Australian workers, which may lead onto an economic boom and higher interest rates from the Reserve Bank of Australia (RBA).
Considering increasing employment and a smaller labour pool in the future, Richardson has said;
‘That combination tells you the preconditions are in place to pay workers more money’.
Reflecting on the factors that triggered Australia’s bout of slow wage growth in recent years, Richardson said;
‘The biggest driver of [the income recession] was a sustained fall in commodity prices.
And although we think that there is still some hot air in them, there’s much less of that now than before, and they look solid enough for 2018 anyway.
That says the main prospects for national income growth rest on wages and, as you know, we see a gradual recovery there’.
Iron Ore Prices Disappoint, Concerning AU Exporters
Although it hasn’t limited Australian Dollar demand today, the fact that iron ore prices have fallen recently has been a slightly worrying issue for AUD traders.
The drop has been blamed on limited Chinese demand for the commodity, along with heavy snowfall in China impeding transport and the transit of materials.
Australia and China have an on-off relationship when it comes to commodities, with fluctuating demand for iron ore having a strong effect on the price of the resource.
New Zealand Dollar to Australian Dollar Exchange Rate Drops ahead of Trade Balance Stats
On a quiet start to the week, the New Zealand Dollar has lost ground to a strong Australian Dollar before key NZ data is released.
This will be the trade balance for December 2017, which will be announced shortly.
Although current forecasts are for a sharp reduction in the November deficit, the figure has previously been volatile and could show a surprise deficit expansion instead.
AUD/NZD Forecast: Further Gains possible on AU Confidence Score
The next notable data out of Australia will come on Wednesday morning, consisting of the National Australia Bank (NAB) business confidence reading for December.
This is predicted to rise from 6 points to 12 during the month, which could push the Australian Dollar to New Zealand Dollar exchange rate higher.
As the last business confidence reading of 2017, growth for Wednesday’s figure would set a healthy precedent going into 2018.
As mentioned above, the NZ trade balance reading could provoke New Zealand Dollar movement, with a decline possible if the deficit doesn’t shrink by as much as forecast.