Dovish Statement from RBA’s Lowe Causes AUD/NZD Exchange Rate Losses
The Australian Dollar (AUD) has made a minor loss against the New Zealand Dollar (NZD) today, dragging the pairing near to its lowest level since 8th June.
This deterioration is primarily because of uncertainty about an imminent US Federal Reserve meeting, which risks triggering greater AUD losses.
Australian domestic data has been unsupportive for the most part, with Reserve Bank of Australia (RBA) Governor Philip Lowe failing to excite AUD traders.
Mr Lowe has indicated that slow and steady economic growth is likely for the foreseeable future; on wage growth, Mr Low said:
‘We will be better off if this increase takes place steadily over time as the economy improves.’
Cementing the assumption that higher interest rates are a long way off, Mr Lowe added:
‘It is important to remember that the environment in which interest rates are increasing is also likely to be one in which people’s incomes are growing more quickly than they are now.’
Combining the two statements has made this a dovish speech from the Governor and suggests ‘business as usual’ with the Australian economy.
Historic Westpac Confidence Score Fails to Support AUD/NZD Exchange Rate
There has been somewhat supportive Australian domestic data today; Westpac’s consumer confidence index for June has risen from 101.8 points to 102.2.
While seemingly a minor increase on the face of it, this is still a supportive result and has made 2018’s confidence rise the best since 2014.
Despite this historic positive, however, Westpac Senior Economist Matthew Hassan has taken the news with caution:
‘The Index has not built on the gains seen at the start of the year and remains well below the levels typically associated with a robust consumer.
‘While there has been a clear lift in confidence around the economy, this has had a muted impact on views around family finances, which remain downbeat.’
New Zealand Dollar to Australian Dollar (NZD/AUD) Exchange Rate Rises despite Pressure from USD
Today’s New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate rise comes despite any real domestic support for the currency.
NZD exchange rates have mainly improved because of the Australian Dollar (AUD) declining in value; traders of both currencies are currently tense.
The only NZ economic news to speak of has been a measure of food price inflation in May; annually, a shift from 2.3% growth to -0.1% contraction has been seen.
Australian Dollar to New Zealand Dollar Exchange Rate Forecast: Volatility ahead on Fed Interest Rate Decision
Both the Australian Dollar (AUD) and New Zealand Dollar (NZD) could struggle in the near-term, when the US Federal Reserve makes its June interest rate decision.
Fed policymakers will be meeting on Thursday and are predicted to hike interest rates from 1.75% to 2%, which could trigger a US Dollar (USD) rally.
In turn, a stronger USD might devalue the Australian Dollar and New Zealand Dollar because it would reduce risk appetite among currency traders.