As the world expected a speech by US President Donald Trump in which he may place more meat on the bones of his financial and tax policies, the Australian and New Zealand dollars treaded water on Tuesday.
PICTURE: BLOOMBERG NEWS
Marketplaces have been longing for more detail on Mr Trump’s promised stimulation strategies to judge should they truly would lift economic growth and inflation, and therefore increase the instance for higher US interest rates.
This kind of outcome would often increase the US dollar across the board, including against the Australian dollar. The doubt made the Aussie put at US$0.7681, nicely within the recent US$0.7650/0.7715 range.
The New Zealand dollar was unchanged at US$0.7189, after two straight days of autumns.
“If everyone can make AUD break out of range, it’s likely Trump,” said Matt Simpson, senior analyst at ThinkMarkets in Melbourne.
“All eyes are on his address as dealers eagerly anticipate clarity over his “extraordinary” tax strategy and financial spending. Failure to meet his own hype could cause a terrible lump for stocks, the US dollar and danger opinion in general.”
Traders were also expecting Australia’s gross domestic product data due on Wednesday, anticipated to show growth rallied by around 0.7 per cent in the fourth quarter following a jolt contraction in the preceding quarter.
Official data on Tuesday revealed Australia boasted its lowest current account deficit in 15 years.
“The rise in commodity costs is also providing a hike to the public coffers courtesy of higher business tax receipts as well as a lift in royalties,” said Gareth Aird, economist at Commonwealth Bank.
“Nominal GDP is set to post a strong elevation as the fruits of increasing commodity costs are represented in higher income increase. We’ve predict a quarterly increase of 3 per cent which will take yearly growth to its strongest rate in 5 years.”
Elsewhere, the Aussie stood near four-month highs on its New Zealand cousin. It was largely level on the yen while the euro came off a close two-year low on the Aussie.
In New Zealand, data out on Tuesday revealed a bigger-than-expected trade deficit while business confidence dipped.
New Zealand government bonds facilitated, sending returns 1.5 basis points higher at the long end of the curve.
Australian government bond futures fell, with both the three-year bond contract along with the 10-year contract down one tick at 98.01 and 97.25, respectively.