Yahoo Finance AUD/USD and NZD/USD Fundamental Daily Forecast – Light Volume Could Lead to Counter-Trend Trade
The Australian and New Zealand Dollars are trading mixed early Monday. There were no major economic events from Australia or New Zealand so the price action is likely being fueled by a reaction to technically oversold conditions.
At 1017 GMT, the NZD/USD is trading .6831, up 0.0019 or +0.27% and the AUD/USD is at .7562, down 0.0001 or -0.02%.
Both Forex pairs finished sharply lower last week with the price action primarily driven by the divergence between the monetary policies of the U.S. Federal Reserve and the Reserve Bank of Australia and the Reserve Bank of New Zealand.
Simply stated, the Fed is hawkish and widely expected to raise interest rates in December and perhaps as many as three times next year. The RBA and RBNZ are neutral and not expected to raise interest rates until 2019.
Additionally, rising interest rates in the U.S. and lower demand for higher-yielding assets in Australia and New Zealand have driven the interest rate differential between U.S. Government Bonds and Australian and New Zealand Government Bonds to its lowest level in 17 years.
Forecast
The AUD/USD and NZD/USD main trends are down and there are no major economic reports today so any rally is likely to be related to profit-taking and short-covering. Any selling pressure could trigger an acceleration to the downside especially by the Australian Dollar which is hovering slightly above major support at .7532.
Today is likely to be a news driven session. In addition, volume could be on the light side because of a U.S. bank holiday on Thursday.
This article was originally posted on FX Empire
