AUD NZD Exchange Rate Trades Narrowly Following Chinese Trade Data

December 8, 2017 - Written by John Cameron

STORY LINK AUD NZD Exchange Rate Trades Narrowly Following Chinese Trade Data

The Australian Dollar New Zealand Dollar (AUD NZD) exchange rate trended narrowly in the Asian session last night as both currencies were lifted by the latest trade figures from China.

Australian Dollar (AUD) Steadies as Chinese Trade Impresses

After the publishing of some disappointing domestic trade figures on Thursday the Australian Dollar was prevented from tumbling much further last night thanks to an impressive Chinese trade balance.

According to data published by China’s General Administration of Customs the nation’s trade surplus jumped from $38.18bn to $40.21bn in November, beating expectations that it would instead narrow to $35bn.

Betty Wang, a senior economist at Australia & New Zealand Banking Group Ltd. in Hong Kong;

‘Global demand for technology products specifically is driving exports, China’s firm placement in the global supply chain and a solid tech outlook likely bode well for trade in 2018.’

However it was the uptick in imports from 17.2% to 17.7% that was particularly positive for both the ‘Aussie’ and the ‘Kiwi’ last night due to Chinas position as the largest single trading partner for both respective currencies.

The Australian Dollar was particularly lifted by the data as it showed that raw material imports also surged, something that bodes well for domestic iron ore and coal exports.

The jump in China’s latest trade figures has also helped to allay fears that economic growth in China may have been slowing after surging in the first half of the year.

Louis Kuijs, head of Asia Economics at Oxford Economics in Hong Kong said;

‘While we still expect China’s domestic economy to cool in 2018 on gradually tighter financial policies, the November import data shows that there are upside risks to our China outlook.’

New Zealand Dollar’s (NZD) Bolstered by Manufacturing Sales

The New Zealand Dollar did begin to edge higher against the Australia Dollar by the end of the Asian session however thanks to an uptick in domestic manufacturing sales.

Building on the strengthen derived from the Chinese trade data the ‘Kiwi’ drifted higher as data released by Statistics New Zealand revealed that domestic manufacturing sales rose 0.3% in the third quarter.

The growth was largely driven by demand for chemical, polymer and rubber product sales which rose 3.7% in the quarter while values advanced 2.6 per cent.

ASB Bank economists said in a note;

‘Over recent years, the underlying supports for core-manufacturing growth have been construction activity and investment demand. Construction performed well in Q3, after a soft performance over the first half of the year.’

‘Further, a strong in lift in transport, machinery and equipment sales (up 7.4 per cent over the past year) indicates strong underlying demand for investment.’

AUD NZD Forecast: New Zealand Dollar to Rally on Business PMI?

Looking ahead to next week movement in the AUD NZD exchange rate is likely to be driven by a slew of Australia data, with the first half of the week possibly seeing a drop in the ‘Aussie’ if Australian business and consumer confidence both trend lower as expected.

However the main focus next week will likely be on Australia’s latest labour report with the AUD NZD exchange rate likely to strengthen again if Australia’s labour markets shows solid growth as forecast.

Meanwhile it will be a quiet session for the New Zealand Dollar on the data front next week with the only notable release set to be the domestic Business PMI on Thursday, with economists forecasting that the manufacturing index will have slipped from 57.2 to 56.7 in November, likely weighing on the ‘Kiwi’.

Current Interbank Exchange Rates

At the time of writing the AUD NZD exchange rate was trending around 1.0977 and the NZD AUD exchange rate was trending around 0.9106.

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TAGS: Australian Dollar Forecasts