The Australian and New Zealand Dollar continued to trade sideways last week as investors were influenced in both directions by U.S. economic data as they tried to figure out the Fed’s next move on the tapering of its asset buying program.

The Aussie and Kiwi started the week under pressure after the July U.S. Non-Farm Payrolls report, released on August 6, suggested the labor market was growing strong enough to warrant an earlier-than-expected tapering from the Fed.

Last week, the AUD/USD settled at .7370, up 0.0016 or +0.21% and the NZD/USD finished at .7039, up 0.0028 or +0.39%.

Conditions turned choppy on Wednesday and Thursday when the U.S. government first reported weaker-than-expected consumer inflation then followed it up with stronger-than-expected.

The week ended on an upbeat note on Friday when the University of Michigan Consumer Sentiment report fell to its lowest level since 2011 as traders expressed doubt in the strength of the economy and the chance the Fed would announce its tapering plans at Jackson Hole, Wyoming at the end of August, or the next Fed meeting on September 21-22.

Weekly Outlook

This week, the focus for Aussie traders shifts to the Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes on Tuesday. On Thursday, traders will get the opportunity to react to the Employment Change and Unemployment Rate reports.

However, the major news will come out of New Zealand where the central bank will make a major announcement on interest rates.

Australian Jobless Rate Expected to Rise, Jobs Lost in July

The rapid decline in Australia’s unemployment rate to a 10-year low looks set to come to an abrupt end, a victim of multiple virus restrictions across the country in recent weeks. The jobless rate has dropped for eight straight months, from 6.9 percent in October last year to 4.9 percent June. This week, the Australian Bureau of Statistics is expected to report that it jumped to 5.0 percent or higher.

Meanwhile, the employment change report is expected to show the economy lost 46,000 to 50,000 jobs in July.

Story continues

The RBA minutes from the August 3 meeting are expected to reveal nothing new since the COVID-19 outbreak has curbed any major decisions.

RBNZ Expected to Deliver its First Rate Hike Since the Pandemic Started

Analysts expect the RBNZ to raise the country’s Official Cash Rate (OCR) for the first time since the pandemic began on Wednesday, August 18. They are expected to base this decision on the strength of rising demand for the country’s key agricultural products, a strong drop in the unemployment rate, and strong retail sales that have risen as a result of increasing imports and exports.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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