Better than Expected Services PMI Bolsteres AUD/NZD
The Australian Dollar New Zealand Dollar (AUD/NZD) exchange rate is trending higher this morning as markets react to Australia’s latest Services PMI.
At the time of writing AUD/NZD is up 0.35% from this morning’s opening levels as investors welcome the uptick in Australian services activity.
Australian Dollar (AUD) Resilient as Service Sector Activity Jumps
The Australian Dollar started this week on strong footing today as Australian published its latest services PMI figures.
According to data published by Australian Industry Group (Ai Group) the domestic service index jumped from 52.0 to 54.9 in January, beating expectations of a more modest rise to 52.7.
This was the highest reading since July and suggests that the Australian economy may be heating up in 2018.
Observers suggest that the uptick may have been partly attributed to consumers looking to escape the blistering heat last month by sheltering air-conditions shops.
Analysts from Ai Group said;
‘Respondents noted improved business confidence and orders from business customers in January, boosted by a rebound in real estate transactions in some locations.’
‘Excessive heat was a plus for some businesses, as more customers sought out air-conditioned shops, restaurants and recreation services.’
However while last month’s index paints a positive picture of growth, analysts warn that higher input costs could weigh on the sector in the coming months.
New Zealand Dollar (NZD) Steady as Commodities Start the Year Strong
Meanwhile the New Zealand Dollar were slightly limited on Monday as investors eye the recent uptick in commodity prices.
With meat, dairy, forestry and aluminium prices all rising in January the ‘Kiwi’ is becoming increasingly attractive to investors.
The latest Dairy auction will be held early on Wednesday, which may see the New Zealand Dollar punch higher if prices rise for a third consecutive time.
AUD/NZD Forecast: Central Bank Rate Decisions Ahead
Looking ahead movement in the AUD/NZD exchange rate is likely to be driven by monetary policy speculation as both the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) hold their first policy meetings of the year.
While neither bank is expected to make any alterations to monetary policy this week the RBA rate decision is likely to have the biggest impact on markets, due to speculation that the bank may hint at possible tightening later in the year.