AUD lifted by USD weakness, NZD suffers as inflation prints lower than expected

Trade in both the Australian dollar and New Zealand dollar was volatile last week as the weakness in USD prompted significant movement in the commodity-correlated currencies.

Both AUD and NZD had a fairly quiet start to the week in terms of data, prompting movement to be driven my market influences, with the decline in the US dollar lending strength to both currencies.

However the New Zealand dollar saw a dramatic drop late on Wednesday when domestic inflation figures fell well below expectations, slumping from 0.5% to 0.1% in the fourth quarter against forecasts of a more modest decline to 0.4%.

Meanwhile, the Australian dollar also suffered in the middle of last week as it struggled to hold its ground amid a rush for Sterling and the euro.

However the ‘Aussie’ proved a little more resilient that its antipodean cousin, rebounding at the tail end of the week’s session as it capitalised on further USD weakness.

Looking ahead the Australian dollar may be able to advance this week following the release of Australia’s own inflation figures, with economists forecasting that price growth will have risen from 0.6% to 0.7% in the fourth quarter.

The ‘Kiwi’ may also look to advance in the coming session, with expectations of some upbeat trade figures possibly helping the currency to recoup some of its recent losses.