AUD/USD and NZD/USD Fundamental Daily Forecast – US Labor Market Data, Hawkish Fed Speakers Weigh on Sentiment
The Australian and New Zealand Dollars are under pressure early Tuesday as the U.S. Dollar remained supported following Friday’s robust job figures that solidified expectations the U.S. Federal Reserve could soon start tapering its massive coronavirus-driven stimulus. Slightly lower Treasury yields are likely limiting losses.
At 03:46 GMT, the AUD/USD is trading .7324, down 0.0005 or -0.07% and the NZD/USD is at .6977, down 0.0014 or -0.20%.
Rising Treasury Yields, Stronger US Dollar
Since Friday’s labor market report the prospect of the Fed’s reduced bond-buying has pushed down U.S. bond prices, lifting their yields and strengthening demand for the U.S. Dollar.
On Monday, the Aussie and Kiwi were pressured as U.S. Treasury yields spiked to three-week highs as surprising strong job openings on top of better-than-expected employment gains in July added to the narrative of an improving labor market.
U.S. job openings, a measure of labor demand, shot up by 590,000 to a record-high 10.1 million on the last day of June, the U.S. Labor Department reported in its monthly Job Openings and Labor Turnover Survey (JOLTS).
That followed Friday’s Non-Farm Payrolls report showing jobs increased by 943,000 in July, above the 870,000 forecast by economists in a Reuters poll.
Fed Speakers Discuss Timing of Tapering
Atlanta Federal Reserve Bank President Raphael Bostic, the first Fed speaker after the jobs data was released, said on Monday he is eyeing the fourth quarter for the start of a bond-purchase taper but is open to an even earlier move if the job market keeps up its recent torrid pace of improvement, Reuters reported.
Boston Federal Reserve Bank President Eric Rosengren was equally forthright, saying that the U.S. central bank should announce in September that it will start reducing its $120 billion in monthly purchases of Treasury and mortgage bonds in the fall, according to Reuters.
Daily Forecast
Besides the stronger U.S. Dollar, weak domestic data is weighing on the Australian Dollar.
A measure of Australian business conditions worsened sharply for a second month in July as coronavirus lockdowns took a heavy toll on service industries and confidence in general.
Tuesday’s survey from National Australia Bank showed its index of business conditions sank 14 points to +11 in June, though that was still above the long term average thanks to record high results ahead of lockdowns.
The survey’s measure of confidence dived 19 points to -8, led by New South Wales State where much of greater Sydney was shut for the entire month.
“The survey shows that the strength in the business sector seen in early-to-mid 2021 has faded on the back of fresh disruptions in the economy but it has faded on the back of fresh disruptions in the economy but it has not yet deteriorated to the lows seen in early 2020,” said NAB chief economist Alan Oster.
In other news, the New Zealand Dollar was also weaker, however, traders still expect the Reserve Bank (RBNZ) to raise its Official Cash Rate (OCR) on August 18.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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