nzd fundamentals

Australian Dollar, New Zealand Dollar Dominate on Increased Demand for Risky Assets

Wednesday, 06 May 2009 20:50:44 GMT  |  Terri Belkas, Currency Strategist

The commodity dollars were the biggest beneficiaries of a broad pickup in risk appetite, which also sent the S&P 500 up 1.74 percent. While investor sentiment has certainly been helping these currencies, the New Zealand dollar and Australian dollar will both face event risk overnight. The 18:45 ET release of New Zealand's unemployment rate is anticipated to increase for the fifth straight quarter in Q1 2009 to a more than 7-year high of 5.3 percent from 4.7 percent. The news would suggest that the New Zealand economy may have contracted for the fifth consecutive quarter, though Q1 2009 GDP results won't be released until June 25. Nevertheless, readings in line with or worse than expectations has the potential to weigh on the New Zealand dollar as traders will move to price in a 25 basis point rate cut by the Reserve Bank of New Zealand on June 10. On the other hand, surprisingly strong results could boost the commodity currency.

Then, at 21:30 ET, the Australian net employment change is forecasted fall by 25,000 during April, marking the second month of job losses. Furthermore, the unemployment rate is anticipated to have risen to a more than 5-year high of 5.9 percent from 5.7 percent. Since the employment change tends to be a very volatile release, this should have the greater impact on the Australian dollar, with a sharper than expected drop likely to weigh on the currency and an unexpected positive result likely to push it higher.

**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar


Check out the Daily Fundamentals in its entirety for a look at what happened throughout the FX markets today.

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