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Weekly roundup: Losses for AUD and NZD as risk appetite evaporates

currency-newsWeekly roundup: Losses for AUD and NZD as risk appetite evaporates
Both the Australian dollar and New Zealand dollar slid lower last week. A general lack of meaningful domestic data gave markets little reason to buy into AUD or NZD while global risk appetite cooled.

Much of last week’s Australian data was of little interest to markets, although New Zealand’s virtually empty data calendar made Australia’s seem packed.

The Australian dollar largely weakened over the last few days, with much of the week’s data failing to inspire confidence in the Australian economy. Thursday’s October labour market data was particularly disappointing, showing an increase in employment of just 3,700 people, compared to forecasts of 18,800, as well as a fall in the participation rate.

The New Zealand dollar also made losses over the course of the week’s trading, with little data to provide support. The latest ANZ consumer confidence index showed another decline in sentiment while, in a blow for the inflation outlook, producer price growth slowed in the third-quarter.

Tomorrow’s release of the Reserve Bank of Australia (RBA) monetary policy meeting minutes could weigh on the Australian dollar, given that they chronicle a meeting where policymakers were more cautious than markets had expected. Governor Philip Lowe will give a speech later in the day.

At the same time, the latest Global Dairy Trade auction could see the price of milk fall again for the fourth consecutive time, which would weaken the outlook for exporters of New Zealand’s most lucrative commodity.

Wednesday’s calendar holds skilled vacancies and construction work done data for Australia, covering October and the third-quarter respectively, and third-quarter retail sales excluding inflation figures for New Zealand.

Both the Australian and New Zealand dollars could be in for significant volatility on Wednesday from overseas data as well, with the US Federal Open Market Committee (FOMC) meeting minutes scheduled for release in the afternoon.

Should the minutes strengthen the odds of an interest rate hike from the Federal Reserve next month, AUD and NZD could see notable depreciation.

The final data of the week for the antipodes will be New Zealand’s trade balance figures. Forecasts are for a stronger uptick in export volumes than import volumes, which will help to push the trade deficit down from -NZ$1.14 billion to –NZ$760 million.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees 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 FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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