Australian Dollar to New Zealand Dollar (AUD/NZD) Forecast - Exchange Rate Softens

Modified: Monday, 2 February 2015 21:07 BST - Written by Frank Davies

STORY LINK Australian Dollar to New Zealand Dollar (AUD/NZD) Forecast - Exchange Rate Softens

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate was fairly static on Friday after the thursday's Reserve Bank of New Zealand statement

The RBNZ suggested that the official cash rate would hopefully remain stable for the foreseeable future, although data would dictate any change ‘either up or down’.

The market saw the RBNZ drop the tightening cycle it had been promising to pick up again after aggressive rate hikes last year in response to globally falling inflation.

Industry expert Stephen Toplis commented: ‘We and the market were surprised by the RBNZ unceremoniously dumping its tightening bias. The downward pressure on the New Zealand Dollar (NZD exchange rate) will remain significant.’

Central bank governor Graeme Wheeler also commented that the New Zealand Dollar exchange rate was high in another attempt to pull the currency lower.

Wheeler suggested that the high New Zealand Dollar was unsustainable in relation to the nation’s economic fundamentals.

The New Zealand Dollar fell to a four-year low versus the US Dollar after tumbling by over 6 US cents in the space of a fortnight. Industry expert Sam Tuck commented: ‘We’ve had a period of very rapid change and it’s possible the new Zealand Dollar overshoots into the 60s. We were forecasting it to reach US 69 cents by the end of next year, but not we’re expecting it to get there earlier.’

Australian Dollar Exchange rate Softens on Forecasted RBA Rate Decision

Meanwhile, the Australian Dollar has been softer against other currency majors as a result of the upcoming Reserve Bank of Australia interest rate decision.

Like the New Zealand Dollar, the ‘Aussie’ has fallen dramatically against the US Dollar, with this pairing dipping to a five-and-a-half year low.

Strategist Raiko Shareef commented: ‘The Australian Dollar’s fall over the past 24 hours has been nothing short of stunning. It has shed the bounce following Wednesday’s better-than-expected inflation report, which took it above 80 [US cents]. The weight of expectation around next week’s RBA meeting continues to mount, such that a nasty snapback beckons should the RBA fail to adjust its language toward an earning bias.’

Aus Dollar Exchange Rate Forecast:

Tuesday will see the RBA announce its interest rate decision and ‘Aussie’ losses are likely if a rate cut does occur.

Meanwhile, Sunday’s release of the AiG Performance of Manufacturing Index could be a mover for the Australian Dollar.

The index resided at 46.9 in December and could edge toward the 50.0 benchmark which denotes growth. In addition, any changes in commodity prices can affect both the Australian and New Zealand Dollars.

Key Aussie Exchange Rates Today (02/02/2015)

The Pound to Australian Dollar exchange rate is -0.71 pct lower with a conversion rate of 1 GBP equals 1.92513 AUD.
The Euro to Australian Dollar conversion rate is -0.05 pct lower at 1.45268 EUR/AUD.
The US Dollar to Australian Dollar exchange rate is -0.32 pct lower with a conversion rate of 1 USD equals 1.28121 AUD.
The Swiss Franc to Australian Dollar conversion rate is -1 pct lower at 1.38106 CHF/AUD.
The Canadian Dollar to Australian Dollar exchange rate today is converting +0.52 per cent higher at 1.01811 CAD/AUD.
The Hong Kong Dollar to Australian Dollar exchange rate converts -0.33 per cent lower at 1 HKD is 0.16525 AUD.
The New Zealand Dollar to Australian Dollar exchange rate today is converting +0.27 per cent higher at 0.93616 NZD/AUD.

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