AUD/NZD Exchange Rate Drops after AU Manufacturing Activity Declines
The Australian Dollar (AUD) has fallen against the New Zealand Dollar (NZD) today, although more broadly the AUD/NZD exchange rate is near a weekly high.
Current AUD/NZD losses have been caused by recent Australian manufacturing sector data, which has shown a larger than expected slowdown in activity during July.
AIG’s manufacturing sector index has declined from 57.4 points to 52, below the predicted 56.8 point level.
This decline means that the manufacturing sector is still currently growing, just not as fast as was previously seen.
Elaborating on the results, AIG analysts said:
‘Infrastructure projects continue to support demand for manufacturing products, but rising energy costs and growing wage pressures are constraining activity.
‘Many respondents noted an increase in wage rates from 1 July (including this year’s minimum wage increase of 3.5%) that are pushing up their labour input costs.’
New Zealand Dollar to Australian Dollar (NZD/AUD) Exchange Rate Resilient despite Unemployment Rate Rise
The New Zealand Dollar (NZD) has risen against the Australian Dollar (AUD) today, despite the handicap of mixed jobs market data.
The latest NZ jobless rate stats have shown a rise in unemployment from 4.4% to 4.5% during Q2 2018.
Today’s NZD/AUD exchange rate gains are likely because the jobs market stats also showed rising wage inflation, which puts pressure on the Reserve Bank of New Zealand (RBNZ) to act.
NZD traders are looking for an interest rate hike from the NZ central bank and increasing wages will make this action more likely.
Another piece of support amidst the jobs market data is the fact that the NZ unemployment rate remains close to a 9-year low, despite the latest rise.
Australian Dollar to New Zealand Dollar Forecast: Are AUD/NZD Exchange Rate Gains ahead on Trade Data?
The Australian Dollar’s (AUD) recent dip against the New Zealand Dollar (NZD) could be replaced with gains on Thursday, when AU trade balance data comes out.
This measures changes to Australian importing and exporting and is predicted to show an increase to the existing trade surplus of AU$0.83bn.
The reading is predicted to grow to a level of AU$0.9bn, potentially boosting Australian Dollar demand because this would mean that Australia is exporting more than it is importing.
Despite the potential for AUD/NZD exchange rate gains on Thursday, however, the Australian Dollar is at risk of falling back against the New Zealand Dollar on Friday.
AU services sector and retail sales data is out during the day and forecasts are for slowing services and sales activity.
While neither reading is expected to show contracting activity levels, signs of an economic slowdown could still rattle AUD traders and weaken the currency.