Australian Dollar New Zealand Dollar Edges Higher on Iron Ore Bullishness
The Australian Dollar New Zealand Dollar exchange rate fluctuated on Monday but eventually trended higher, although only barely above the week’s opening of 1.05 due to resistance from NZD.
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Australian Dollar (AUD) Benefits from Risk Rally on Iron Ore Forecasts
This week saw traders turning bullish on risk-correlated currencies like the Australian Dollar and its New Zealand rival, as global markets became increasingly excited about the prospects of Wednesday’s OPEC meeting.
Oil producing nations are set to meet on Wednesday with hopes of coming to an agreement and laying out a detailed plan of its oil output cap proposal.
While not an oil-correlated currency, the Australian Dollar and the NZD both benefitted from a generally higher demand for commodity currencies throughout the day.
However, the ‘Aussie’ was able to benefit over the ‘Kiwi’ due in part to highly hawkish forecasts on prices of iron ore, Australia’s most lucrative commodity.
Many forecasters believe iron ore prices are on track to reach above the key level of $80 per tonne for the first time in over two years.
Some analysts believe this, as well as higher coal prices, could mean that the Reserve Bank of Australia (RBA) could lean towards higher interest rates in the coming year.
New Zealand Dollar (NZD) Struggles to Hold against Bullish ‘Aussie’
The New Zealand Dollar performed solidly on Monday, benefitting from a weaker US Dollar and hopes of an oil output cut plan from OPEC’s Wednesday meeting.
However, while New Zealand’s own commodity, dairy, had performed well recently, the Australian Dollar’s iron ore bullishness was difficult to hold at bay.
NZD trade was also weakened by ongoing speculation that the Reserve Bank of New Zealand (RBNZ) may continue its easing bias despite multiple interest rate cuts throughout 2016.
Australian Dollar New Zealand Dollar Forecast: OPEC Excitement through Wednesday
While the Australian Dollar New Zealand Dollar exchange rate is typically not heavily influenced by oil commodity news, global commodity markets are likely to focus on OPEC’s upcoming meeting until the meeting comes and goes.
Speculation on whether or not the OPEC meeting will propose an impressive plan will keep traders alight throughout Tuesday and this could keep AUD NZD trade bustling despite a lack of fresh local data due for publication.
As a result, unless iron ore prices begin to show a downward change in trajectory, the AUD NZD exchange rate could continue to edge higher until Wednesday.
Wednesday’s Asian session will see the publication of Australia’s October new home sales results and private sector credit report, as well as a speech from Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler, which could influence the ‘Kiwi’.
At the time of writing, the Australian Dollar New Zealand Dollar exchange rate traded at around 1.05, while the New Zealand Dollar Australian Dollar exchange rate trended in the region of 0.94.