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Australian Dollar New Zealand Dollar (AUD/NZD) Exchange Rate Slides on RBA Rate Cut Forecast

February 26, 2019 - Written by John Cameron

Australian Dollar New Zealand Dollar (AUD/NZD) Exchange Rate Slips despite Improving US-China Relations

The Australian Dollar New Zealand Dollar (AUD/NZD) exchange rate slipped over the course of the morning.

The pairing is currently trading at an inter-bank rate of NZ$1.0402.

The New Zealand Dollar is likely buoyed on the increased likelihood the US and China are going to reach a deal soon.

US President Trump sparked hope as he indicated that the US and China were close to an agreement.

Talking to a gathering of US governors, Trump stated:

‘We’re going to have another summit, we’re going to have a signing summit. So hopefully, we can get that completed. But we’re getting very, very close.’

Trade Optimism Buoys Risk-Sensitive New Zealand Dollar

Today saw the Australian Dollar (AUD) slip against NZD following a forecast from UBS that the Reserve Bank of Australia (RBA) will cut interest rates in November.

Both the New Zealand Dollar and Australian Dollar opened this week’s session strong following US President Donald Trump’s announcement that he would delay implementing trade tariffs on Chinese goods.

Trump tweeted:

‘I am pleased to report that the US has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.

‘As a result of these very productive talks, I will be delaying the US increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for US & China!’

Along with trade optimism, the ‘Kiwi’ was supported by the jump by 1.7% in retail sales during the fourth quarter.

Meanwhile, a cooling in US-China trade tensions was not the other thing buoying the Australian Dollar at the start of the session.

China rejected reports that suggested they had banned coal imports from Australia from the Chinese port of Dalian.

Instead China’s foreign ministry said that quality control checks has strengthened in response to shipments not meeting environmental standards.

AUD/NZD Outlook: Will NZ Imports and Exports Buoy the New Zealand Dollar?

Tomorrow New Zealand’s imports, exports and trade balance data will be released, which could see the ‘Kiwi’ rise against AUD if imports and exports increased in January.

The AUD/NZD pairing is likely going to see movement if there are any further developments in US-China negotiations.

If there is further indication the two are close to are close to reaching an agreement, the pairing could remain muted as gains from the risk-sensitive currencies would offset one another.

The ‘Aussie’ could gain an upswing in support tomorrow following the release of Q4 construction work done.

The forecast suggests that construction work rose by 0.4% compared to the previous contraction of 2.8%.

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