The Australian and New Zealand dollars hit fresh yearly highs against the U.S. dollar, driven by optimism around China’s potential stimulus measures and a thaw in U.S.-China trade tensions. With global risk appetite improving and traders betting on further upside, both AUD/USD and NZD/USD look poised for more gains despite weak domestic economic data.
Contents
- 1 China Stimulus Speculation Fuels Aussie and Kiwi Rally
- 2 U.S.-China Trade Talks Signal Diplomatic Breakthrough
- 3 Chinese Policy Announcement May Deliver Coordinated Stimulus
- 4 Weak Australian and New Zealand Data Highlights Domestic Risks
- 5 AUD/USD Technical Outlook: Breakout Gathers Momentum
- 6 NZD/USD Eyes Further Gains After Breaking Above .6000
- 7 Conclusion: AUD and NZD Positioned for More Gains, but Risks Remain
- 8 About H2T Finance
China Stimulus Speculation Fuels Aussie and Kiwi Rally
The AUD/USD and NZD/USD currency pairs soared on Tuesday, boosted by a combination of a weaker U.S. dollar and speculation that Chinese authorities may announce fresh economic stimulus. The move was further reinforced after news broke that U.S. and Chinese officials will meet this week in Geneva to discuss trade—a positive signal for risk assets.
The Australian and New Zealand dollars, often seen as proxies for Chinese economic health, responded strongly to the developments. Markets are now eyeing Wednesday’s joint policy announcement from China’s key financial regulators for confirmation of stimulus plans.
U.S.-China Trade Talks Signal Diplomatic Breakthrough
Investor sentiment improved significantly after it was confirmed that U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will hold informal talks with China’s Vice Premier He Lifeng. While formal negotiations are not expected yet, the meeting is the first sign of renewed dialogue after months of escalating tariffs.
The talks follow warnings from Bessent that continued tariffs could resemble a trade embargo, and come just before the Federal Reserve’s May FOMC meeting. Any progress in Geneva could ease pressure on the Fed to resume rate cuts and boost confidence in global growth prospects.
Chinese Policy Announcement May Deliver Coordinated Stimulus
Chinese financial authorities—the People’s Bank of China (PBOC), the National Financial Regulatory Administration, and the China Securities Regulatory Commission—will hold a rare joint press conference on Wednesday. Analysts expect this to include measures aimed at supporting economic growth amid the ongoing trade dispute.
This anticipated move mirrors a similar surprise announcement in September, which led to a surge in Chinese stocks and bonds. With the country targeting 5% GDP growth in 2025, expectations are high for new monetary tools and sector-specific support.
Weak Australian and New Zealand Data Highlights Domestic Risks
Despite strong external tailwinds, economic data from Australia and New Zealand has disappointed. In New Zealand, the unemployment rate held steady at 5.1% in Q1, but underemployment rose, and full-time employment declined by 45,000. Wage growth also fell short of forecasts.
In Australia, household spending declined by 0.3% in March, raising concerns about GDP growth. These soft data points increase the likelihood of future rate cuts by the RBA and RBNZ, potentially limiting the upside for their respective currencies.
See more related articles: US dollar strengthens trade optimism
AUD/USD Technical Outlook: Breakout Gathers Momentum
The AUD/USD pair broke through key resistance around the 200-day moving average and .6450 zone, reaching its highest close since November. Technical indicators like RSI (14) and MACD point to rising bullish momentum.
Immediate resistance lies at .6550, with a break potentially leading toward .6700. The previous resistance area now acts as short-term support, reinforcing the case for buying dips.
NZD/USD Eyes Further Gains After Breaking Above .6000
NZD/USD extended gains above the psychological .6000 level, overcoming the previous downtrend resistance. If the pair breaches .6030, it may target .6110 or even .6200 in the near term.
Support is now at .5950 and .5900, while momentum indicators favor the bulls. MACD is close to a bullish crossover above zero, which would strengthen the bullish technical outlook.
Conclusion: AUD and NZD Positioned for More Gains, but Risks Remain
Both AUD/USD and NZD/USD are benefiting from improved global sentiment, driven by hopes of Chinese stimulus and easing trade tensions. While technicals and macro tailwinds suggest further upside, weak domestic data and central bank dovishness pose ongoing risks.
Traders should monitor the upcoming Chinese policy announcement and U.S.-China trade developments closely, as they are likely to set the tone for AUD and NZD performance in the days ahead.
About H2T Finance
H2T Finance’s Market Reports deliver concise, data-driven summaries of the European, American, and Asian trading sessions, alongside weekly analyses and short-term forecasts. Our expert reports cover key currency pairs and price projections, making them an essential tool for traders to make informed decisions and plan their trades effectively. Backed by real market insights and professional commentary, these reports help you stay aligned with market momentum and make smarter trading decisions.
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