- Australia Economic Recovery
- New Zealand Steady Economic Activity
- Resurgent U.S Dollar
NZD/USD and AUD/USD retracted from five-month highs in Tuesday trading session as the U.S Dollar strengthened across the board ahead of the much-awaited Federal Reserve policy meeting report. The dollar index, which tracks greenback strength against other major currencies, was up by 0.2% to $96.23 after dropping by as much as 3% the last month.
AUD/USD- NZD/USD under Pressure
AUD/USD dropped from highs of $0.7043, touching lows of $0.6910 as a correction from 5-month highs continued to gather steam.
Weakness in the Australian Dollar against the U.S Dollar came at the backdrop of economic releases showing Australian business activity is picking up with the easing of coronavirus lockdown restrictions. Data also showed that job ads are stabilizing slowly with the picking up of economic activity.
The New Zealand dollar was also under pressure in Tuesday trading session tanking from five-month highs of $0.6579 dropping lows of $0.6494. The drop came hot on the heels of ANZ Research, showing continued steady economic activity after the COVID-19 pandemic.
Business activity in the country has improved by 9 points to -33%. However, economic activity remains at the lowest level in history, with 22% of surveyed firms indicating they expect a lower business activity for the rest of the year.
Weakness in the Australian Dollar and New Zealand dollar comes at the backdrop of a resurgent U.S Dollar. Last week’s U.S data caught the markets off-guard, signaling that the world’s largest economy is recovering nicely from the COVID-19 pandemic. The addition of 2.5 million jobs with unemployment rate improving to 13% eased concerns about U.S economy conversely fuelling strength in the greenback.
Strengthened dollars should continue to weigh in on NZD and AUD, which have registered substantial gains in recent weeks. Looking ahead, traders await the release of U.S wholesale Inventories later in the day that should help shed more light on the U.S economy post coronavirus. The focus will also be on the Jolts Jobs opening report expected to influence dollar strength conversely AUD/USD and NZDUSD exchange rate.