Australian Dollar to New Zealand Dollar Exchange Rate Advances but Gains Limited despite US Trade News
Due to resilient New Zealand Dollar (NZD) trade, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate’s strength was limited on Monday, despite trade-positive news for Australia.
Over the weekend, Australia appeared to have secured an exemption from the US President’s plans to place strict tariffs on US imports of steel and aluminium.
As a result, some analysts anticipate Australia’s economy could receive a boost, as Australia will inevitably ramp up steel and manufacturing exports to the US.
However, despite this seemingly optimistic news for Australia’s economy, AUD/NZD has been mixed movement. The pair spent much of Monday trade lower than the week’s opening level of 1.0781, before testing higher levels towards the end of the European session.
Limited Australian Dollar (AUD) demand was likely caused by concerns that Australia’s economy could still be negatively affected by a potential ‘trade war’. According to Innes Willox from the Australian Industry Group;
‘While we hope that Australia will win exemptions from the latest steel and aluminium tariffs, this would be only a partial victory,
As a country with a high reliance on trade, the risks of broader damage to the global economy from a trade war are great,’
New Zealand Dollar (NZD) Exchange Rates Resilient Ahead of NZ Growth Results
Despite a lack of strong supportive New Zealand data in recent sessions, the New Zealand Dollar has remained resilient and has kept pressure on the mixed Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate.
The New Zealand Dollar has been more appealing than the Australian Dollar for much of the year so far, due to disappointing Australian data.
Last week’s New Zealand manufacturing sales stats from Q4 were decent, rising from 0.0% to 1.4%.
Market anticipation for New Zealand’s Q4 Gross Domestic Product (GDP) results from Q4, due on Thursday, has also helped keep the New Zealand Dollar buoyant.
Australian Dollar to New Zealand Dollar Forecast: Key Data and US Trade Developments in Focus
Could the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate continue to edge higher in the coming days? That largely depends on upcoming data and any changes to the US stance on trade tariffs.
Tuesday will see the publication of most of this week’s most notable Australian ecostats, including February business confidence from NAB and March consumer confidence survey figures from Westpac.
Signs of rising confidence in Australia could help make the Reserve Bank of Australia (RBA) more confident, as the bank has recently expressed concerns about Australian household spending.
Australia’s January home loans results will also be published, followed by the latest RBA bulletin on Thursday.
The New Zealand Dollar, on the other hand, could be influenced buy New Zealand food inflation on Tuesday or current account results on Wednesday.
This week’s most influential ecostats for AUD/NZD is likely to be Thursday’s Q4 NZ Gross Domestic Product (GDP) results.
New Zealand growth is expected to have improved from 0.6% to 0.7% quarter-on-quarter and from 2.7% to 3.1% year-on-year.
Of course, any developments regarding the US Presidential administration’s stances on trade tariffs and exceptions could also influence the Australian Dollar.
For example, if the US backtracks on Australian exemption the ‘Aussie’ could plunge. Tariff exemption for New Zealand too, on the other hand, would make it easier for NZD to avoid losses against AUD.