AUD/NZD: Aus Dollar to NZ Dollar Exchange Rate Gets Stronger after RBA Statement

November 10, 2014 - Written by David Woodsmith

STORY LINK AUD/NZD: Aus Dollar to NZ Dollar Exchange Rate Gets Stronger after RBA Statement

The Australian Dollar exchange rate (AUD) trended higher against the New Zealand Dollar (NZD) on Friday following the Reserve Bank of Australia (RBA) statement.

The AUD was offered support after the central bank stated that it wouldn’t be altering monetary policy in the near future, an assurance which gave some stability to the Australian commodity currency.

RBA Warns of Economic Slowdown and High Australian Dollar

The RBA statement issued a warning that the Australian economy could remain subdued while ‘Aussie’ strength increased as a result of Japan’s aggressive monetary policy stimulus measures.

The RBA Statement read: ‘Gross domestic product [GDP] growth is still expected to be below trend until mid-2015.’ Furthermore, interest rates have remained at the current 2.5% historical low for some time, and look likely to continue at that level.

The statement continued: ‘The very accommodative monetary policy settings will continue to provide support to demand and help growth to strengthen, in time.’

However, the RBA has recently come under fire for the low rates, which have allowed property investors to take advantage of the housing market. The prospect of a housing bubble has been a prominent fear for investors and economists alike who believe that the housing market could need cooling measures. The RBA commented on the housing market, stating: ‘Conditions in the housing market are consistent with strong growth in dwelling investment.’

In other news, the Australian construction sector experienced a slowdown in October, with the Performance of Construction Index dipping to 53.4 from 59.1. The figure still remains above the 50 benchmark which indicates that the sector is expanding.

New Zealand Data Scarce Leaving Exchange Rate Movements to Global Developments

The New Zealand Dollar experienced a quiet day of trading on Friday with no domestic data scheduled for publication.

Next week may hold some more influential releases for New Zealand Dollar trading, with Monday seeing New Zealand House Sales, House Price Index, Card Spending and Heavy Truckometer figures published.

The New Zealand Business Performance of Manufacturing Index and Food Price figures will be out on Wednesday, while Thursday will reveal the level of Consumer Confidence in the Trans Tasman nation.

The Australian Dollar has an influential week ahead:

Monday will see Chinese data published which could offer the Australian currency some support if favourable as China is Australia’s largest trading partner.

Furthermore, Australian Home Loans, Investment Lending and Consumer Confidence figures are out on Monday which could impact the ‘Aussie’ considerably.

Business Confidence, Westpac Consumer Confidence and House Price Index stats are scheduled for release on Tuesday while Credit Card Purchases, Wage Cost Indexes and Credit Card Balances are published on Wednesday.

Toward the end of the week Australian Consumer Inflation Expectations are released and could prove highly significant for Australian Dollar movement.

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