Worse Conditions in New Zealand Enable AUD/NZD Exchange Rate Rise
The Australian Dollar and New Zealand Dollar have seen losses today, although with the latter currency being worse off an AUD/NZD exchange rate rise has occurred.
Australia’s problems have come from the Reserve Bank of Australia (RBA), where Deputy Governor Guy Debelle has warned about compliancy in global markets.
Mr Debelle has cautioned that;
‘There have been factors behind the low structure of interest rates which are difficult to understand completely and raise questions about its durability.
In particular, I find it puzzling that there is little compensation for duration in the rate structure’.
While not going so far as to predict an economic crash in the coming months, Mr Debelle’s comments have still unsettled AUD traders.
New Zealand Dollar to Australian Dollar (NZD/AUD) Exchange Rate Slides on Reports of Economic Uncertainty
New Zealand Dollar movement has been mostly negative today, with the NZD making moderate losses against the Australian Dollar and peers like the US Dollar.
This poor performance comes after the release of Roy Morgan survey results, which have pointed to high levels of economic uncertainty among respondents.
Roy Morgan CEO Michele Levine commented on the company’s findings, stating;
‘New Zealanders elected Jacinda Ardern as Prime Minister at last year’s election on Ardern’s vow to deal effectively with increasing poverty and inequality and a rising gap between the rich and poor.
Ardern’s policy priorities also include increasing housing affordability and providing housing for those currently homeless via sensible migration policies and by amending the tax incentives for housing investment’.
While Mrs Ardern has unveiled plans to tackle these issues, Levine adds the caveat that;
‘The fact is that poverty and inequality remain a huge issue for New Zealanders – a record high 20.5% of New Zealanders say the issue is the biggest facing New Zealand – up 3% on pre-election levels’.
Australian Dollar to New Zealand Dollar Forecast: Will AUD/NZD Exchange Rate Rise on RBA Minutes?
The Australian Dollar to New Zealand Dollar exchange rate gains seen this week could extend in the week ahead, as a number of high-impact AU data releases are due out.
First up will be the Reserve Bank of Australia (RBA) meeting minutes, released on 20th March.
If these show policymaker optimism about future economic growth then the AUD/NZD exchange rate could rise sharply.
Given previous cautious attitudes at the RBA, however, the minutes might weaken the Australian Dollar if they suggest a ‘wait-and-see’ approach to the months ahead.
Any AUD losses could be reversed on 22nd March, when employment data for February will be announced.
The jobless rate isn’t expected to change from 5.5%, but if full-time employment rises as predicted then the Australian Dollar could advance on the New Zealand Dollar.
Next week’s main NZ data will be the Global Dairy Trade price index on 20th March, followed by the Reserve Bank of New Zealand (RBNZ) interest rate decision on 21st March.
The New Zealand Dollar has a chance at shaking off recent losses if the dairy price index shows a major rise, as this will mean better prices for NZ exporters.
As with the release of the RBA minutes, the RBNZ’s policy meeting might spark an NZD rise if policymakers are optimistic about New Zealand’s economic future.