[WEEKLY NOTION] FXEMPIRE - AUD/USD & NZD/USD Weekly Forecast - Oct 26, 2020

All eyes are on the upcoming Presidential Election of the United States on Nov 3 and traders letting stimulus updates out of sight, at least for now to prepare for this.

The Australian and New Zealand Dollars finished higher last week, helped by a weaker U.S. Dollar which tumbled amid hopes for a new U.S. stimulus package. Negotiations between Republicans and Democrats continued all week but they were unable to reach a compromise deal by the end of the week. Earlier in the week, both currencies tested major support that if broken would have done severe damage to the daily and weekly charts.

Last week, the Australian Dollar settled at 0.7136, up 0.0059 or +0.84%.

During the same period, the New Zealand Dollar finished at 0.6691, up 0.0086 or +1.31%.

What's Also Coming Up Next?

The Aussie and Kiwi owed most of their rally to the plunging greenback than any domestic activity, with the Australian Dollar still vulnerable to further policy easing from the Reserve Bank of Australia (RBA) at its November 3 meeting and the New Zealand Dollar feeling the pressure of continued talk of negative interest rates next year by the Reserve Bank of New Zealand policymakers.

The fiscal stimulus talks are a wildcard at this point. Deadlines have been set, passed and reset again. It is believed that the stimulus aid will eventually be approved, but the timing is unknown at this point.

Australia will report quarterly CPI data on Wednesday. It is expected to have improved from -1.9% to 1.5%. Trimmed Mean CPI is expected to have improved from -0.1% to 0.3%.

Some investors will also be looking ahead to the November 3 RBA meeting. The RBA has held its cash rate at a record low 0.25% since can emergency 50 basis points (bps) cut in mid-March. However, economists widely predict the RBA will trim the rate at its November 3 policy meeting by 15 bps to 0.1%. This move, coupled with the buying of bonds further out the yield curve should be enough to keep the pressure on the Aussie Dollar.

Buying long-dated bonds is one way that central bank policymakers would reduce funding costs.

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