US Dollar Index Plunges, Led by Surge in Euro, Dovish Yellen

Published: 27 August 2017 | Written by administrator | Hits: 1651

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Weekly NZDUSD

New Zealand Dollar

The New Zealand Dollar fell sharply against the U.S. Dollar last week after the New Zealand government cut its economic growth forecasts

in a pre-election finance update.

The NZD/USD settled at .7239, down 0.0071 or -0.97%.

“The softer growth New Zealand has experienced in the six months to March flows through to a lower starting point in the 2017/2018 year,” says finance minister Steven Joyce in the Treasury’s Pre-election Economic and Fiscal Update 2017.

Joyce’s forecast that the NZ economy grew by 2.6% during the year to June, down from an earlier 3.2% forecast, while growth for the year to June 2018 is expected to be 20 basis points lower than earlier projections, at 3.5%.

Over the four-year forecast period, New Zealand’s economic growth is now seen averaging 3%, rather than the 3.1% previous predicted.

Joyce also said that the NZ budget surplus grew by $2.1 billion for the year just ended, but then announced reduced Treasury forecasts for the surplus over the four years to June 2021.

“However Treasury expects the lower growth forecast to result in surpluses that are $1.8 billion lower over the next four years,” Joyce added.

The news left traders weighing the possible implications the government’s projections may have for interest rate policy at the Reserve Bank of New Zealand. Translation: Investors are worried the economy is not strong enough to warrant a near-term interest rate hike by the RBNZ.

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Weekly AUDUSD

AUD/USD

There were no major reports from Australia last week. Most of the price action was related to position-squaring ahead of the Jackson Hole symposium. The Aussie picked up strength at times when the spread between Australian Government Bonds and U.S. Government Bonds widened. Also influencing the price action was risk sentiment, or demand for higher-yielding assets.

The AUD/USD finished the week at .7931, up 0.0004 or +0.06%.

This article was originally posted on FX Empire