AUD/USD and NZD/USD Fundamental Forecast – April 13, 2017

The Australian and New Zealand Dollars surged on Wednesday and the buying continued into early Thursday. The rally was fueled by comments from President Donald Trump who told the Wall Street Journal he thought the currency was getting “too strong”.

The Greenback was hit hard on Wednesday after Trump told the Wall Street Journal that the dollar “is getting too strong” and he would prefer the Federal Reserve to keep interest rates low.

Trump’s comments served as a reminder to traders that he favors protectionism. In his comments, he reiterated his view that a strong currency hurts U.S. competitiveness.

Also helping to push the U.S. Dollar lower was the yield on the benchmark U.S. 10-year Treasury note which fell to 2.239 percent, its lowest in nearly five months.

Additionally, U.S. government debt prices rose on Wednesday after U.S. Secretary of State Rex Tillerson’s meeting with Russian officials in Moscow didn’t go as well as planned.

Tillerson said during a news conference Wednesday that U.S.-Russia relations are at a “low point” and need to improve. “The world’s two foremost nuclear powers cannot have this kind of relationship,” Tillerson said.

The Treasury Department auctioned $12 billion in 30-year bonds at a high yield of 2.938 percent. The bid-to-cover ratio, an indicator of demand, was 2.33. This was down from the previous 3.17 percent.

In other news, import prices posted their biggest drop in seven months in March, falling 0.2 percent. Export prices, meanwhile, gained 0.2 percent last month.

The Treasury Department said the budget deficit for March totaled $176.2 billion, compared to $108 billion in March of last year because of special factors. A big part of that increase reflected $42 billion in April benefit payments that were shifted into March because April 1 fell on Saturday this year.

The AUD/USD was also supported by a surge in Australian employment in March. The latest report showed employment posted its biggest gain in full-time jobs in almost 30 years.

The details of the report showed employment rose 60,900 from February, beating the 20,000 estimate. The jobless rate held at 5.9% as economists predicted, as more people searched for work.

Full-time jobs soared by 74,500, the biggest increase since December 1987; part-time employment fell 13,600. The participation rate rose to 64.8%; economists forecast 64.6%.

The AUD/USD soared on the news and the NZD/USD moved higher with it. Additionally, Trump’s negative comments about the dollar also supported both currencies. The upside momentum created by the news suggests the rally should continue into Thursday.

Today, traders will get the opportunity to react to the latest data on U.S. Producer Inflation, weekly unemployment claims and consumer sentiment. New Zealand and Australia will go on a bank holiday ahead of the Easter week-end.