Aussie and Kiwi Move Lower

Aussie and Kiwi Move Lower

15 September 2016, 15:19
Andrew Kreimer
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The Australian economy has been on a steady decline since February when it bought more than NZ $1.10. Things took a turn for the worse after the big news of the weak employment data from Australia surfaced. Initially the expected change in the employment data was expected to be above +15K but the employment changes came in at a drastic short of-3.9K. Not did this only present the Australian economy in a negative light but it also hinted that the labor market in Australia might be weakening. Seeing the more than low numbers compared to expected change caused many traders to pull out which affected the AUD/USD pair negatively. This caused the AUD/USD to fall from 0.7475 to 0.7445, but was able to bounce back to 0.7465.

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On the other hand, we have new from New Zealand as well which was not all great as well. The initial GDP New Zealand was expected to be 1.1% but following its release today it fell short and came in at 0.9%. Naturally, this led to a sharp decline in the value of the NZD but after the GDP data was revised to be 0.9% it recovered rather quickly. According to CoreLogic, the booming housing market played a great part in the healthy growth spurt of New Zealand which caused average house prices to go up by 14.6%, in the month of August.

After the information for the AUD and NZD had arrived it was finally time to evaluate the AUD/NZD. Though initially things do look better for NZD as compared to the AUD’s weak data but it is expected that New Zealand will be cutting down rates even more which would mean a further drop in the value of the NZD in the near future. In coming weeks, this change in value could add an optimistic tinge to the AUD/NZD.

In the end, the AUD/NZD is a probably a better buy but would need evidence of Australia’s wage stagnation being over and rise in liquidity to make it more bullish. 

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