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The Australian and New Zealand Dollars are edging higher on Monday, continuing Friday’s rally that was fueled by weaker than expected U.S. economic data. Today, investors will get the opportunity to react to a slew of U.S. reports, while things were quiet in Australia and New Zealand overnight.
Some of the price action is related to technically oversold conditions. Last week’s steep sell-off in both currencies may have been overextended due to a thin-holiday trade. The price action we’ve been looking at since Thursday, may be related to short-covering and position-squaring.
At 07:12 GMT, the AUD/USD is trading .7054, up 0.0016 or +0.24% and the NZD/USD is at .6672, up 0.0016 or +0.25%.
Australian traders could also be reacting to optimistic news over U.S.-China trade negotiations. According to a New York Times report, trade talks between the U.S. and China are now in the final stages, said U.S. Treasury Secretary Steven Mnuchin, ahead of this week’s meeting in Beijing between negotiators from both sides.
“We’re getting into the final laps,” the report quoted Mnuchin as saying, in an interview at the Milken Institute Global Conference in Los Angeles.
“I think both sides have a desire to reach an agreement,” Mnuchin said, according to the New York Times report. “We’ve made a lot of progress.”
According to the report, Mnuchin said that while both countries are nearing a deal, the negotiations are reaching a stage where either an agreement could happen, or it could end without a deal.
In other news about China, the president of the World Economic Forum is hopeful for a breakthrough as the U.S. prepares to send a high-level delegation to Beijing this week for trade negotiations.
“I think they are now pretty close to the moment where there will be a breakthrough,” Borge Brende, president of the World Economic Forum, told CNBC’s “Capital Connection” on Sunday.
“If they find a way out to break that impasse that has been created, I think that can also add additional growth to the global economy – that’s needed,” Brende said.
Daily Forecast
The catalyst behind the price action later today will be U.S. economic data. Late in the session, traders will start positioning for Chinese economic data, due to be released early Tuesday.
It may be confusing to some, but there will be 2 simultaneous releases after the government skipped the data release last month. The February Core PCE Price Index is expected to come in at 0.2% and the March Core PCE Price index is expected to come in at 0.1%. February Personal Spending is expected to have risen 0.2% and March Personal Spending is expected to post a 0.7% reading. Personal Income is expected to have risen 0.4%.