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Weekly roundup: Domestic data gives AUD and NZD pre-weekend boost after uncertain week

AUD and NZD wobbled last week as global risk appetite fluctuated in response to weaken in the US dollar and geopolitical tensions. Domestic data for both nations painted a mixed picture, but firmed towards to the end of the week, giving the commodity assets a last-minute boost.

Both the Australian dollar and New Zealand dollar started last week on weak form thanks to gloomy outlooks on monetary policy. The TD Securities inflation estimate for Australia suggested inflation had weakened from 2.7% to 2.6%, while recent comments from the Reserve Bank of New Zealand (RBNZ) over the strength of the New Zealand dollar continued to weigh on NZD.

Both AUD and NZD saw demand pick up on Tuesday, however. The latest Reserve Bank of Australia (RBA) policy meeting saw policymakers maintaining their relatively upbeat outlook upon the economy, even if they didn’t make any changes to monetary policy this time round.

Meanwhile, the latest Global Dairy Trade auction saw diary prices rise 0.3% - a relief given that four of the previous five events had resulted in declining prices.

Below-forecast Australian GDP figures on Wednesday reminded markets that the RBA was likely to keep interest rates on hold for some time to come, even if they were feeling positive enough to not consider rate cuts. GDP clocked in at 1.8% instead of at 1.9% as forecast on the year, while quarter-on-quarter growth rose from 0.3% to 0.8% instead of to 0.9%.

Data for Australia disappointed on Thursday as well. The construction PMI fell from 60.5 to 55.3, while retail sales stagnated instead of growing 0.2% as predicted and the trade balance unexpectedly near-halved to A$460 million instead of rising to A$1 billion in line with estimates.

Recovering risk appetite and some positive domestic data helped AUD and NZD to recover somewhat towards the weekend.

Tuesday’s Australian business confidence and conditions surveys will show how the private sector’s outlook on the economy is holding up. Meanwhile, New Zealand food prices figures for August could suggest a strengthening or weakening of inflationary pressures.

Thursday’s Australian employment data is likely to cause significantly volatility for AUD, while NZD could fluctuate after the Business NZ performance of manufacturing index is published.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now overseas all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FSA approval and has completed the Certificate in International Treasury Management (CertiTM)

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