AUD/USD and NZD/USD Fundamental Weekly Forecast – Appetite for Risk Will Drive Price Action
James Hyerczyk FX Empire12 August 2018
The table has been set for further weakness in the Australian and New Zealand Dollars. However, short-term technical factors could at times trigger a few short-covering rallies due to oversold conditions. With the central bank activity out of the way, traders are going to focus on appetite for risk due to the political uncertainty in Turkey. Prices could plunge further if the situation in Turkey raises contagion fears in the Euro Zone.
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The Australian and New Zealand Dollars broke sharply last week amid expectations that domestic interest rates would remain at historical lows longer-than-expected and rising geopolitical turmoil that dampened demand for higher-yielding currencies.
Last week, the AUD/USD settled at .7295, down 0.0102 or -1.38% and the NZD/USD settled at .6577, down 0.0171 or -2.53%. Australian Dollar
The Australian Dollar weakened as the central bank showed no intention of raising rates over the near future.
Last week, the RBA ended its August monetary policy meeting by holding rates at a record low of 1.50 percent, marking two whole years with no move in interest rates, the longest policy pause in its modern history.
“Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual,” RBA Governor Philip Lowe said in a statement, reiterating his previous outlook.
Late in the week, the RBA issued an upbeat monetary policy report, with policymakers continuing to project that “above trend” economic growth will drive the unemployment rate lower, and wages higher, thereby pushing consumer price inflation higher over coming years.
Despite the upbeat report, investors felt the projected increase in inflation is still insufficient for markets to boost expectations for an Australian interest rate rise before late 2019.
GBG Price at posting:
1.8¢ Sentiment: Buy Disclosure: Held
