AUD/USD and NZD/USD Fundamental Daily Forecast – Risk Appetite Continues to Dictate Price Action

James Hyerczyk
·2-min read

The Australian and New Zealand Dollars are edging higher on Thursday, basically mirroring the price action in the U.S. stock index futures markets. Risk appetite continues to be the key price driver in the Aussie and Kiwi as evidenced by yesterday’s steep sell-off that correlated with a plunge in U.S. equities. The catalyst behind the weakness are the rapidly increasing COVID-19 cases in the United States and Europe that threaten to derail the global economic recovery.

At 08:17 GMT, the AUD/USD is trading .7050, up 0.0007 or +0.10% and the NZD/USD is at .6644, up 0.0007 or +0.10%.

S&P 500 futures and Dow futures rebounded 1%, which traders attributed to heightened volatility and to the less gloomy mood around Asia as China’s economy builds up steam. The commodity-linked Aussie and Kiwi were also supported by higher crude oil prices.

In economic news, Australia’s quarterly Import Prices fell 3.5%, worse than the -2.1% forecast. NAB Quarterly Business Confidence came in at -10.

New Zealand’s ANZ Business Confidence was -15.7 versus the previously reported -14.5.

Australian Import Prices Fall

Australian Bureau of Statistics figures show import prices fell 3.5 percent in the September quarter led by a 7.2 percent decline in telecommunications equipment and an 8.7 percent drop in “office machinery”.

The bureau says the cheaper phones are due to delays in new model releases and discounting of older models.

“Cheaper computers reflect a firmer Australian Dollar compared with the lows back in March,” Commonwealth Securities chief economist Craig James said. “Consumers will wait and see whether the cheaper prices are passed on by retailers.”

NAB’s Quarterly Survey Shows Conditions Improving

NAB’s latest quarterly business survey shows conditions are improving as the economy opens up from COVID-19 restrictions. But NAB chief economist Alan Oster says confidence will be a key factor in determining how quickly the country returns to normal.

“Policy support has been crucial for the business sector, and we think the government may need to do more next year unless confidence really rebounds,” Mr. Oster said.

The survey released on Thursday showed conditions rose 22 points in the quarter to an index of minus four points, while confidence was up five points to an index of minus 10 points.

“Despite the strong gains, both conditions and confidence remain very weak,” Mr. Oster said. “While there had been some improvement in activity in the quarter as the economy opened up, the impact on the labor market will lag.”

ANZ Business Outlook Survey Shows Solid Improvements

The NZD/USD nudged higher after ANZ Business Outlook survey results for October showed solid improvements in confidence levels from the previous month.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire