The Australian and New Zealand Dollars are trading higher on Monday. Most of the support is coming from a weaker U.S. Dollar. The Greenback is feeling pressure from concerns over U.S. tax reform. However, last week’s solid domestic events are also underpinning the currencies along with the Fed’s “dovish” outlook for interest rate hikes in 2018 and 2019.
At 2046 GMT, the AUD/USD is trading .7670, up 0.0031 or +0.41% and the NZD/USD is at .6998, down 0.0010 or -0.14%.
In other news, Australian New Motor Vehicle Sales came in 0.1%, better than the previous 0.00% read.
The Mid-year Economic and Fiscal Outlook came out in line with market expectations, showing smaller budget deficits for the current and next financial year. According to the outlook, the 2017-18 underlying cash deficit is seen at around AUD23.6 billion, from AUD29.4 billion at budget. The 2018-19 underlying deficit is expected to be AUD20.5 billion from AUD21.4 billion previously.
In addition, the consensus for a surplus in 2020-21 was maintained, albeit with a slightly healthier buffer. Improved balance projections have resulted in marginally lower net debt projections, which are expected to peak at a lower 19.2% of GDP, from a peak 19.8% at budget time in May, the report said.
Oversold conditions and optimism over the appointment of a new governor at the Reserve Bank of New Zealand continued to provide support.
The widening of the differential between Australian and New Zealand Government Bond yields and U.S. Government Bond yields continued to remain supportive for the Aussie and Kiwi.
In the U.S. on Monday, the NAHB Housing Market Index improved to 74, up from a downwardly revised 69 last month.
Early Tuesday, investors will get the opportunity to react to the Westpac Consumer Sentiment report for New Zealand. The last report came in at 112.4. Later, ANZ Business Confidence for New Zealand will be released. The last report came in at -39.3.
At 0030 GMT, the Reserve Bank of Australia will release its latest Monetary Policy Meeting Minutes.