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AUD/USD and NZD/USD Fundamental Weekly Forecast – Aussie Jobs Report Should Set the Tone

By:
James Hyerczyk
Published: Jan 20, 2020, 07:03 UTC

This week’s price action will be largely controlled in Australia by the Employment Change and Unemployment Rate reports. The results of these reports could determine whether the Reserve Bank of Australia trims their benchmark interest rate in February.

AUD/USD and NZD/USD Fundamental Weekly Forecast – Aussie Jobs Report Should Set the Tone

There were no major economic releases in Australia last week, but traders continued to express concerns over the impact of the massive bushfires on the economy. Because of the damage to the economy especially the tourism industry, some traders are starting to price in a rate cut by the Reserve Bank in February.

The Aussie was also influenced by economic news from China. China’s dollar-denominated imports from the U.S. rebounded in November and December, Reuters reported citing data from China’s customs released on January 14. It was the first time that its exports went up since March last year.

In December China’s trade surplus with the U.S. was $23.18 billion – down from $24.6 billion in November.

China’s GDP numbers which came in on Friday largely met analyst expectations. It announced its economy grew by 6.1% in 2019, meeting expectations even amid a trade dispute with the U.S. Its GDP grew 6.0% on-year in the fourth quarter of 2019.

That’s unchanged from the pace in the third quarter, which was believed to be its slowest GDP gain in at least 27 ½ years.

The AUD/USD finished the week at .6872, down 0.0028 or -0.40%.

New Zealand Dollar

New Zealand business sentiment improved starkly in the last three months of 2019 from the decade-low hit the previous quarter, a private think tank said on Tuesday.

A net 21% of firms surveyed expected general business conditions to deteriorate compared with 40% – the worst reading since March 2009 – in the previous quarter, the New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business opinion (QSBO) showed.

The NZD/USD settled at .6611, down 0.0025 or -0.37%.

US-China Trade Deal Signing Provides Some Support

President Trump signed a “phase one” trade agreement with China as the world’s two biggest economies try to rein in a more than 18-month trade war.

The deal includes provisions to root out intellectual property theft and forced technology transfers and increase Chinese purchases of U.S. goods, though it leaves open questions about enforcement.

Additionally, the Trump administration aims to start negotiating the next piece of the trade agreement before the November 2020 election.

Strong US Data Weighs on Aussie and Kiwi

Consumer prices rose slightly less than expected in December and monthly underlying inflation pressures retreated, which could allow the Federal Reserve to keep interest rates unchanged throughout this year.

The U.S. Labor Department also reported its producer price index for final demand ticked up 0.1% last month after being unchanged in November.

Weekly jobless claims unexpectedly dropped by 10,000 to 204,000. Economists polled by Reuters expected a print of 216,000. Meanwhile, retail sales climbed by 0.3% in December, matching expectations. The Philadelphia Federal Reserve business index also jumped to 17 in January from 2.4 in December.

Finally, U.S. housing starts soared nearly 17% in December to a 13-year high, according to a Friday release from the Census Bureau.

Weekly Forecast

This week’s price action will be largely controlled in Australia by the Employment Change and Unemployment Rate reports. The results of these reports could determine whether the Reserve Bank of Australia trims their benchmark interest rate in February.

In New Zealand, investors will be focusing on the quarterly Consumer Price Index report.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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