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AUD/USD and NZD/USD Fundamental Daily Forecast – Risk-On Session Will Be Supportive for Aussie

James Hyerczyk

The Australian Dollar is trading slightly better early Monday, showing no dramatic reaction to the bombing of the Syrian chemical factories by a U.S.-led coalition early Saturday (local time). The price action reflects a general calm in the financial markets which is a strong indication that today’s price action will be driven by investor appetite for risk.

Crude oil is also trading lower after opening flat and posting an initial surge to the upside. U.S. equity market are trading higher. Upside momentum could continue to strengthen in the Aussie if stock continue their rally.

At 2214 GMT, the AUD/USD is trading .7767, up 0.0008 or +0.10%.

Daily AUD/USD

Another factor that could be supportive for the Australian Dollar is the easing of tensions between the U.S. and China over the trade dispute. Despite concerns about higher tariff proposals, ongoing negotiations should limit their effects. However, the currency could turn lower swiftly if higher tariff are actually imposed on more products and countries.

The earnings season will also heat up this week, with more than 10% of the companies in the S&P 500 reporting their first quarter results. Robust earnings could underpin stock prices that could lead to increased demand for risk, making the Australian Dollar a more attractive asset.

There are no major reports out of Australia early Monday. The U.S. will report Core Retail Sales which are expected to come in at 0.2%. Retail Sales are expected to jump 0.4% from -0.1%.

The Empire State Manufacturing Index is expected to come in at 19.8, down from 22.5. Business Inventories are expected to come in at 0.6%, matching last month’s report. The NAHB Housing Market Index is expected to rise a notch to 71.

Finally, Federal Open Market Committee Member Raphael Bostic is scheduled to speech. Recently, he said he favors raising interest rates twice more this year, but was open to shifting his view if the outlook warranted a different policy approach.

“My forecast had three moves for this year,” Atlanta Fed President Raphael Bostic said on March 23, “To the extent growth accelerates more than our models predict, then four could be prudent. If it comes in less than our models predict, then two could be prudent.”

This article was originally posted on FX Empire

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