- AUD/NZD consolidates gains in the Asian session.
- AUD loses track on downbeat economic data.
- The Kiwi gains on risk-on mood.
AUD/NZD kicks off Tuesday’s morning session on a higher note. The cross-currency pair moves in a range of 1.0725-1.0740.
At the time of writing, the AUD/NZD pair trades at 1.0727, up 0.09% for the day.
The Australian service PMI for May confirmed a fast expanding sector and its strongest in 18 years. The data showed prices are still rising, however, wages paid are now rising faster. In another set of data, Aussie Job ads came at a 12 year high, pointing to a continued rapid tightening in the labor market and a steady fall in the jobless rate at 5.5%. The higher readings could increase the inflation expectations.
The Business Confidence decreased to 20 points in May from 26 points in the previous month. The lower readings dampen the sentiment around the aussie.
On the other hand, Kiwi gained on the home country better economic prospects and outlook. New Zealand’s Prime Minister Jacinda claimed that the New Zealand economy is “ outperforming” Australia economically”. The major difference comes from the unemployment rate. The jobless rate in New Zealand came at 4.7% as compared to 5.5% in Australia.
In addition to that lower debt levels and a solid 3.5% growth rate across the forecast period are also higher than that of Australia.
Meanwhile, the rating agency S&P has affirmed Australia’s credit rating as AAA and improved its outlook to ‘stable’. However, the New Zealand ratings were at one notch lower at AA+ and with a ‘ stable’ outlook. The could be a limiting factor for the kiwi.
