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    AUD/NZD: long-standing leap on 28.03.2016

    In many countries stock exchanges are closed due to the Catholic Easter Monday. Trading volume and activity of traders are low.

    Movement in the cross-pair AUD/NZD was determined by the decision of the Central banks of New Zealand and Australia. The RBA has left interest rate unchanged, maintaining it at the level of 2% since May 2015. At the same time RBNZ unexpectedly lowered the interest rate by 0.25% to 2.25% at the beginning of the month. In the after- meeting comments, the bank expressed concerns about deterioration of the world economy and the rise in the inflation expectations.

    At the dairy auction, which took place later, the price of the dairy products fell by 2.9% reducing the flow of export revenue to the national budget. Exports of the dairy products amounts to 118% of the total exports of the country. However, 20% of all products produced in New Zealand are exported. One of the main items of export is agricultural products. The largest purchaser of New Zealand products is China. Decline in the Chinese imports amid slowdown of economic growth in China and low world prices for dairy products and other agricultural products have strong negative impact of New Zealand’s economy.

    Australia is an exporter of the commodities as well. However, Australia has well-developed oil and gas sector and mining sector, which has been strong until recently. Lately, all Australian economic news has been positive. Australian GDP in Q4 rose by 3.0%, which is above the forecast of 2.6%. A quarter earlier, GDP growth amounted to 2.7%. Growing GDP indicates stable economic state of the country’s economy.

    In this situation we can assume that the pair AUD/NZD will continue to grow. However, it is not all easy. High rate of the national currency is unfavourable for the exporters from Australia and can impede economic recovery in the country. Further rise in price of the AUD worry the leaders of the Central bank of the country.

    In the situation when most the central banks in the world adhere to monetary easing policy, RBA will sooner or later follow their example. On 5 April RBA will adopt interest rate decision. If the rate is lowered the AUD will fall as well as the pair AUD/NZD.

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