Short positions and standoffs after last week's strong sell help support the Australian and New Zealand dollars on Monday. The stock price indicates that some investors might think that the measures taken last week were exaggerated.
The general nervousness over decisions taken by the Reserve Bank of New Zealand on interest rates and monetary policy on Wednesday could also explain the price movement. A holiday in Japan and the reopening of markets in China after the Lunar New Year, which lasted a week, also have an influence on the decisions of operators.
At 6:17 am GMT, the AUD / USD was trading at 0.707, up from 0.0007 or + 0.11% and the NZD / USD at 0.664, up from 0.0020 or + 0.27%.
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Several factors influenced the price course last week. Early last week, the Reserve Bank of Australia (RBA) kept its key rate at a record 1.5%th month, but abandoned his long-standing prediction that an improvement in the economy meant that the next move would likely be on the rise. "data-reactid =" 25 "> A number of factors influenced price developments last week: Early last week, the Reserve Bank of Australia (RBA) kept its key interest rate at a record level of 1.5% for a thirtieth month, but abandoned its long-standing prediction that the improvement in the economy meant that the next move would probably be on the rise.
In its monetary policy statement, the RBA lowered its growth forecast for gross domestic product (GDP) for the year from the end of June to 2.5% instead of 3.25%. The RBA has also lowered its inflation forecast for the 12 months prior to June 30 from 2% to 1.25%.
Futures traders began anticipating at least two rate hikes from the RBA, resulting in a sharp fall in the Australian.
In New Zealand, the Kiwi fell in sympathy with the Australian. Sales pressure was also fueled by a weaker-than-expected labor market report. Like the Australian dollar, sellers hit the New Zealand dollar anticipating lower rates later in the year.
Australian and Kiwi traders will pay close attention this week to commercial developments in US-China trade relations, as negotiations begin later this week. Traders are worried because last week, Larry Kudlow, economic advisor to the White House, said that it remained a "long enough distance to go" before the conclusion of an agreement between China and the United States. United States. A report also announced that US President Trump and Chinese President Xi Jinping would not meet before the deadline of March 2 to reach an agreement.
In addition, the Wall Street Journal reported last Friday that the two countries had not yet developed a draft on the points on which they agreed or disagreed. This proves that both parties are still far from an agreement.
Traders could put aside trade negotiations for a few days this week as investors prepare for the RBNZ's first decision on Wednesday's interest rates since November. It is generally expected that the central bank will leave its key rate unchanged, but traders are already predicting a probability of about 42% rate cuts as early as June 2019.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Please let us know what you think in the comments below. "data-reactid =" 33 ">Please let us know what you think in the comments below.
This article was originally published on FX Empire