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Weekly roundup: AUD and NZD boosted as uncertain US policy outlook fans risk appetite

currency-newsWeekly roundup: AUD and NZD boosted as uncertain US policy outlook fans risk appetite
Weakness in the latest US data provided some support for the Australian dollar and New Zealand dollar last week, but there were problems at home that muted the strength of AUD and NZD.

Market risk appetite was strengthened the beginning of last week thanks to strong Chinese manufacturing data, a rise in copper prices, and forecasts for increased Chinese demand for base metals. This helped boost the Australian dollar, while the New Zealand dollar was able to record some gains on the back of a solid rise in dairy prices.

The Australian dollar was victim of its own strength later in the week, with markets staying away from the antipodean asset due to its limited upside potential. This benefited the New Zealand dollar, which was able to record strong gains on the back of a set of cautious minutes from the US Federal Open Market Committee (FOMC).

Friday’s November Australian trade balance figures severely disappointed forecasts, sending the Australian dollar tumbling. The trade balance had been expected to rise to AU$550 million, but a surprise downwards revision the October balance into a deficit of -AU$302 million was partly responsible for seeing a shortfall of -AU$628 million in November.

The New Zealand dollar, meanwhile, was able to hold onto its recent gains thanks to weekly US jobs data, but it lacked any intrinsic driving factors to push it higher.

The Australian and New Zealand data calendar is fairly lacking this week, which could see data from overseas have a great impact upon AUD and NZD than their respective domestic reports.

However, tonight’s ANC Roy Morgan weekly consumer confidence index, tomorrow’s building approvals and Thursday’s retail sales figures could cause some jitters for the Australian dollar, while New Zealand’s house sales data on Tuesday and building permits figure on Thursday will at least give NZD something to react to.

Chinese data could have a bigger impact upon AUD and NZD this week, given that the nation is a major trading partner for both Australia and New Zealand. Wednesday sees the release of the Chinese consumer price index for December, which is expected to show an uptick in price growth.
This could boost AUD and NZD, as rising prices suggest rising consumer demand, which in turn filters through to more export orders for Australian businesses. Friday offers Chinese trade data, so strong import figures here would further boost the Australian and New Zealand dollars.
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