July 3, 2015 - Written by John Cameron
STORY LINK Forex Forecast Now: Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Movement Predicted with RBA Meeting Ahead
Chinese PMI, Australian Retail Sales Leave AUD Exchange Rate Down over 1% against NZD, EUR, USD This Week
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate fell by 1% on Friday as investors ditched the ‘Aussie’ in reaction to some disappointing data releases. Australia’s below-forecast retail sales growth of 0.3% weighed on the South Pacific asset, as did China’s poor Services PMI. The Chinese index came in at 51.8 in June, down from 53.5 in May and moving closer to the 50 mark separating growth from contraction. As China is Australia’s main trading partner, the report knocked the latter nation’s growth prospects and helped drive speculation that the Reserve Bank of Australia will cut interest rates again at some point this year.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped 1.6%, the Australian Dollar to Euro exchange rate tumbled 1.7% and the Australian Dollar to US Dollar (AUD/USD) exchange rate fell by 1.6% before the weekend.
Currency Outlook: NZD to EUR, GBP, USD Exchange Rates Struggling after Dairy Auction
The New Zealand Dollar’s gains against the Australian Dollar were a little limited as the ‘Kiwi’ came under pressure of its own following the last Global Dairy Trade Auction. Dairy produce is New Zealand’s main export, so the auctions always tend to have an impact on demand for the country’s currency. Whole milk prices were shown to have fallen by 10.8%, with the sharpness of the decline taking investors by surprise and driving the New Zealand Dollar to a new over five-year low against the Pound (GBP/NZD).
Industry Expert AUD Exchange Rate Outlook and Future Currency Forecast
Currency expert Stephen Innes provides his assessment of the Australian Dollar’s current performance and potential future capabilities.
‘The Aussie held up really well in the face of the vulnerability in Europe early in the week. However, we’re seeing it (Aussie dollar) finally succumbed to softer domestic and Chinese data and a drop in commodity prices. The continued upheavals in the China stock markets is not helping regional risk environment, which has been weighing on the Antipodeans. It’s quite difficult to make much out of current markets as positioning is likely light ahead of the Greece vote, not to mention the US Independence day observance. However, we should be in for lively markets next week as I expect traders to be back in the saddle with a vengeance. In the face of a relatively resilient Aussie should favour a move lower in the upcoming months, if not weeks. The market is pricing in two rate cuts this year (from the Reserve Bank of New Zealand) and it appears the Kiwi will likely be the most susceptible of all commodity block currencies as the data pulse continues to weaken. One thorn in the RBNZ side while attempting to offset the declining commodity prices though monetary policy is New Zealand house prices rose 9.3% year on year the three months up to June.’
The main cause of Australian Dollar exchange rate movement next week is likely to be the Reserve Bank of Australia’s interest rate announcement. If the central bank implies that interest rates will be slashed before the year is out, the New Zealand Dollar could recoup losses against its Australian rival. That being said, the RBA looking to cut borrowing costs will increase the odds of the Reserve Bank of New Zealand (RBNZ) doing likewise and dampen demand for the ‘Kiwi’.
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