AUD/USD and NZD/USD Fundamental Daily Forecast – Stimulus, Fed Drive Price Action Ahead of Thursday’s Reports

The risk sensitive Australian and New Zealand Dollars are trading mixed early Wednesday with the Aussie feeling some downside pressure and the Kiwi hovering near the 2-year high reached earlier in the week. Both are being supported by a weaker U.S. Dollar and steady demand for risky assets.

Although the main focus will be on the progress in negotiations toward new U.S. coronavirus-relief and the Fed announcements at 19:00 GMT, traders will be eyeing key U.S. reports early in the session and Thursday’s New Zealand GDP data and Australian reports on Employment Change and the Unemployment Rate.

At 04:12 GMT, the AUD/USD is trading .7552, down 0.0004 or -0.06% and the NZD/USD is at .7101, up 0.0012 or +0.16%.

US Stimulus Update

Investors cheered developments in Washington regarding a stimulus package designed to help ailing Americans from the economic ramifications of the COVID-19 pandemic.

House Speaker Nancy Pelosi invited congressional leaders, including Senate Majority Mitch McConnell, to discuss government funding and the relief package. On Monday, a bipartisan group of lawmakers released a proposal for another round of economic relief on Monday evening.

Federal Reserve Monetary Policy Announcements

The Federal Reserve will release its statement with projections on the stance of monetary policy on Wednesday afternoon. While the Fed’s long term view is expected to be improved due to the vaccine, the central bank is expected to sound very dovish at the end of its meeting.

The Fed may see a brighter long-term outlook when it releases its economic forecasts Wednesday due to vaccine developments, but it also has the opportunity to disappoint at least some investors who are expecting immediate changes in its bond buying program.

A number of economists expect the Fed to simply give out more information and guidelines on what would prompt it to make changes, saving the actual policy shift for later.

US Economic Reports

During the U.S. trading session, investors will get the opportunity to react to reports on Retail Sales, Flash Manufacturing PMI and Flash Services PMI.

Major Reports Out of Australia, New Zealand on Thursday

New Zealand is set to record its biggest ever increase in GDP on Thursday, but economists say the question now is whether the recovery can be sustained.

The Australian Employment Change report is expected to show an increase of 40.9K, this is down from the previously reported 178.8K. The Unemployment Rate is expected to hold steady at 7.0%.