Weekly Currency Exchange Update – May 29th, 2023.
Last week the AUD markets were mainly impacted by the economic data of their counterpart currencies. The AUD/USD market was down -1.53% compared to the previous week, and the AUD/NZD market was up 1.37% compared to the previous week.
On Tuesday, Australia will release its Building Permits data which reveal the number of permits for new construction projects. This is important as it indicates the amount of corporate investments in the country. Analysts expect the data to come out worse than previous numbers.
On Wednesday, expect some volatility as Australia’s Consumer Price Index is due to be released. This helps us understand if the purchasing power of the AUD is being impacted by inflation. There have been no forecasts for the CPI data thus far.
Thursday and Friday are big data days for the USD as we’re expecting the release of the Manufacturing PMI, Non-Farm Payrolls, and Initial Jobless Claims data, among other releases. Expect all USD markets to face volatility, including AUD/USD.
AUD/USD
This past week, the AUD/USD hit its lowest point in 2023 at 0.6494, owing to the economic uncertainty looming around the corner. The market opened the week at 0.6649 and closed at 0.6518. It has dropped 4.40% year-to-date.
The US is drowning in debt, and there has been no significant progress in Washington to raise the debt limit. The US treasury yields and stocks are both taking a tumble as Treasury Secretary Janet Yellen has identified June 1 as the day that the Treasury may run out of cash.
Australia is a big exporter of gold, and it mainly exports to China. As a result, this currency is greatly impacted by developments in China. The PBoC has recently decided to keep its interest rates unchanged, which is keeping a lid on the AUD.
AUD/NZD
The AUD/NZD pair faced a sharp climb up the charts on May 24, following the release of the RBNZ interest rate decision. The market climbed from 1.056 to 1.072 within a single day before closing the week at 1.077. This has been a positive week for the AUD/NZD pair.
The RBNZ recently raised their interest rates by 25 basis points as expected, considering that inflation has decreased but is still relatively high. Rates were previously at 5.0% and are now at 5.25%. The NZD markets took a nosedive following the release of this interest rate decision.
Furthermore, retail sales have worsened for both the Kiwi and the Aussie as consumer spending is slowing in both regions due to inflation. New Zealand faced numbers that were previously at -0.6% and are now at -1.4%. Similarly, Australia faced numbers that were previously at 0.4% and are now at 0%.
