Improved backdrop for AUD and NZD – AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, is looking at the set-up for the RBNZ policy meeting that follows on Thursday and recent trends in Australia which has resulted in the improved backdrop for the AUD and NZD. 

Key Quotes

“Commodity price support has increased for both.  Recent New Zealand economic reports have been better than expected, suggesting the economy is running solidly above trend.  The Australian economy is operating close to trend and is well advanced in working through the downturn in mining investment. 

In light of recent signs of modest recovery in China and improving trends in India and other emerging markets, both NZD and AUD may out-perform major currencies, such as GBP, dealing with the Brexit fallout, and EUR, working through weak economic momentum, banking sector problems and political uncertainty. 

After putting all their chips down in their August policy statement, the RBNZ will struggle to sound as dovish this time.  The risk of significant volatility around the BoJ and Fed meetings suggests caution, but conditions have improved for AUD and NZD recently.  A peaking in the Australian property market may be a negative that comes into view, more likely, next year.”