New Zealand Dollar + Australian Dollar Forecasts: AUD Downtrend Predicted to Resume, NZD Strength Lies Ahead

The British Pound versus Australian Dollar Exchange Rate: 0.8 pct up day-on-day at 1.7095.
The British Pound versus New Zealand Dollar Exchange Rate: 0.9 pct lower at 1.9404.
The Australian Dollar versus New Zealand Dollar Exchange Rate: 1.64 pct lower at 1.1364.

Please Note: The above are spot market quotes; your bank will affix a discretionary spread to the figures when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.

A big headache for the Australian Dollar (Currency:AUD) came overnight in the form of poor employment figures which are dealt with in detail here.

We consider the latest forecasts for both the Australian and New Zealand dollars in the wake of today's events.

The End of the Aus Dollar Rebound?

Gareth Berry at UBS says he believes the recent recovery rally could now be ending:

"We doubt the AUDUSD rebound over the past two weeks has much further to run. What is likely to be a dovish set of RBA minutes next week would likely reinforce suspicions that the central bank maintains a medium-term easing bias.

"Furthermore, if the FOMC announces a taper on Sep 18 as UBS Economics expects, the conditions would likely then be in place for AUDUSD to trade back below 0.90 again over time, and towards our 1m and 3m targets of 0.88.

Boris Schlossberg at BK Asset Management says:

"The news put a serious crimp in the Aussie recovery rally with the pair dropping to a low of 9233 in the aftermath of the release.

"The Aussie has been a relative strength performer over the past week or so as concerns over the hard landing in China and further rate cuts from the RBA receded from the market.

"Tonight's weak labor data however puts the issues of rate cuts back on the table. With demand likely to contract as employment conditions deteriorate the RBA may have no choice but to accommodate more before the year end and such a move could put further downward pressure on the Aussie."

Australian Dollar / New Zealand Dollar Exchange Rate Downside Resumes

The New Zealand Dollar is today's star performer.

Addressing price action in the Aus to NZ dollar exchange rate Berry says:

"The AUDNZD downtrend resumed overnight, having stalled somewhat over the past month. We have been short the cross in one form or another as a trade recommendation since Feb 1, and we still see scope for further slippage
towards 1.10 by year end.

"There was a minor shift in rhetoric accompanying the RBNZ’s unchanged policy decision. The bank served notice that OCR hikes “will likely be required next year”. This is arguably a hawkish tilt given previous rhetoric indicated only that rate hikes “may well be needed” next year.

"A more hawkish development was buried inside the quarterly Monetary Policy Statement though. Forecasts for the 90-day bill rate (a proxy for the likely trajectory of the policy rate) were raised materially."