Forecast-Beating AU Trade Balance Reading Leaves AUD/NZD Exchange Rate Positive
The Australian Dollar has made a minor advance against the New Zealand Dollar today, following the release of AU trade balance data for February.
Although the national surplus has reduced from AU$0.95bn to AU$0.825bn, this hasn’t been as bad as the expected AU$0.7bn outcome.
Maintaining a steady stream of exports remains a key concern for Australian companies, given the recent signs of a possible global trade war.
New Zealand Dollar to Australian Dollar Exchange Rate Declines as USD Strengthens
The New Zealand Dollar has fallen back against the Australian Dollar today, but remains near its best exchange rate of the week in the NZD/AUD pairing.
This shift comes after a rise in confidence among US Dollar traders, following a concerning clash between the US and China over trade.
China threatened to impose sweeping tariffs on the import of US goods yesterday, but officials from both nations are still in regular communication.
Because of this, some traders have concluded that a full-blown trading conflict may not be inevitable, which has supported the USD and damaged the NZD.
Volatility Forecast for Australian Dollar to New Zealand Dollar Exchange Rate on US Payrolls Data
Both the Australian Dollar and New Zealand Dollar could decline in value before the end of the week, when high-impact US economic data comes out in the near-term.
This will consist of the US change to non-farm payrolls reading for March, along with an employment rate update for the same month.
Current estimates are for a reduction in the US jobless rate, from 4.1% to 4%. Such a result would be a major step towards future Federal Reserve interest rate hikes.
That said, USD traders may focus more intently on changes to average wages during March – if average earnings don’t rise then the USD could decline.
The other major US data to watch out for will be the non-farm payrolls figure, which measures the number of new jobs added to the US economy.
This reading has been volatile in the past, so if it shows a smaller than expected rise in employed persons then the US Dollar could also be damaged.
The basic logic of the US Dollar’s influence on the Australian Dollar and New Zealand Dollar is that a stronger USD could lower demand for AUD and NZD.
On the other hand, if the US Dollar drops before the weekend, both the Australian Dollar and New Zealand Dollar could appreciate because of higher risk sentiment.
Further ahead, the Australian Dollar could slip on 10th April when the NAB business confidence reading for March comes out, as it is expected to show a decline.
Next week’s main NZ data will also be a business confidence reading, out on 13th April.
Unlike the Australian reading, the NZ figure is predicted to show growing business confidence so could trigger a late-week NZD/AUD exchange rate rise.