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Summary
- The Kiwi and Aussie dollars firm after solid gains on Thursday
- Commodities on firmer ground with demand for crude rising.
- Last week, the currencies were weak.
Currency movements were modest on Friday as there was no reason for a major movement. The AUD was up for a fourth day, and NZD also moved a little higher, back above the 0.93 mark. In fact, they held strong and retained their position gained on Thursday against the USD.
On Thursday, amidst volatility in equity markets, commodity currencies – the Australian and the New Zealand dollars gained the most against with the NZD continuing to recover from its last week’s sell-off.
The news that buoyed the currencies was partly the FOMC meeting of Monday, which markets mistook to be the beginning of a hawkish stand by the Federal Reserve.
More than that, commodities have been firmer, with copper bouncing back by 2.3% after China’s sale of its copper reserves turned out to be small.
Also Read: AUD & NZ Kiwi Weak On Biden’s Plan To Tax The Weathiest
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Commodities firm, copper bounces back
Even crude moved slightly higher due to increase in demand from the US. It’s summer season and the demand is likely to go up in the US for crude oil. Since the NZD and the AUD are top commodity currencies, both moved up by almost 0.25% in the last 24 hours. The NZD particularly edged higher by almost a cent from its lows and was trading on Thursday morning at 0.7040. Both the currencies did not show much reaction to the COVID-19 developments in Wellington and Sydney. In Sydney, additional restrictions are being placed, while in Wellington, a traveler was found with the new strain of coronavirus. He had visited a number of sites in Wellington during the weekend. The Capital city of Wellington was forced to announce Alert-2 till Sunday.
Also Read: What is copper and what is its strategic importance?
NZD regains some lost ground
Last week, the Kiwi dollar struggled to regain some of its lost ground despite positive news of better-than-expected GDP numbers. The Kiwi dollar had moved down after Fed’s announcement and weakness on the commodities front. The Aussie and the Kiwi dollars both edged slightly higher from their nine-week lows on positive economic data from both the sides. However, last Wednesday, they had plunged to nine-week lows on the expectations from the Fed for a possible rate hike and tapering of bond buying. The good economic data in both countries had lifted the spirits last Thursday, but only marginally.
Also Read: New Zealand just escaped recession, GDP grows by 1.6% in March quarter
Also Read: Australian, Kiwi Dollar Firm Ahead of Series of Global Events
While New Zealand announced strong numbers at 1.6% rise in GDP for the March quarter much against the RBNZ’s forecast of dip in the GDP to 0.6%. Australia also reported bullish data on employment. It announced a surge of 115,200 in May, which is four times of the market forecast.
The expectations are that the RBA and the RBNZ might take a second look at their dovish stand of the monetary policy and start tightening it sooner than later.
