Markets did not receive any new benchmarks on Monday due to the fact that banks and US exchanges were closed due to a national holiday. On Tuesday morning, trading in the Asia-Pacific region took place in different directions. Volatility is low but the situation may change after the publication of ISM indices in the US manufacturing sector today at 12:00 UTC.

NZD/USD pair

Kiwi updated the 4-year low. While the trend continues to be negative, there is no reason for optimism.

The only positive conclusion that can be formulated if one evaluates the prospects of the New Zealand economy with one phrase will sound like this: "it could have been worse". GDP growth in the first quarter amounted to 2.5%. According to ANZ forecasts, the economic growth rate will gradually decline to 2.2% despite incentives from the RBNZ. Unemployment will not be able to gain a foothold at the current level of 3.9%. In the future two quarters, it should grow to 4.2%. The rate may fall to 0.75% by the beginning of 2020 despite the historical minimum of 1%. Inflation is unlikely to rise from the current 1.7%, which excludes the normalization of monetary policy in the foreseeable future.

Three key parameters by which to evaluate the prospects of the New Zealand economy, including foreign trade, the state of financial markets and global uncertainty. All three indicators have negative forecasts. Kiwi has nowhere to wait for support and therefore, the threat of further decline remains high.

Testing the 4-year low 0.6097 in the near future is inevitable, after which the road to the 2009 lows will open. Positive changes are possible only due to large-scale external support. For example, the conclusion of a full-fledged trade agreement between the US and China, but such a scenario is unlikely.

AUD/USD pair

RBA left the rate at the current level of 1% following the meeting on Tuesday morning as expected. In an accompanying statement, the RBA notes that the global financial conditions remain favorable despite the continuing risks of decline. Meanwhile, the RBA sees the economic prospects in Australia in a positive way, substantiating its position with low interest rates, a recent tax cut, ongoing infrastructure costs, signs of stabilization some well-established housing markets and brighter prospects for the resource sector.

From each word, the RBA blows uncertainty or apprehension despite the seemingly clear message. This uncertainty is also monitored by the positions of large Australian banks. For example, NAB predicts that GDP growth rates remained weak in the second quarter and a slight increase relative to the 1st quarter was due solely to export growth. Oppositely, consumption remains low, as well as housing investment continues to decline and business investment is also declining.

NAB also notes that retail sales declined year on year for the first time in history, which is an obvious sign of declining consumer demand.

AiGroup looks at the current situation a little more positivel but also notes that capital expenditures (CAPEX) decreased by 2 square meters by 0.5% or 1.0% y/y. Growth is observed only in the mining sector but construction and the services sector look very weak. Accordingly, stability is ensured exclusively by the still stable downtime for raw materials. And if, for example, China shows a slowdown in economic growth, then Australia will not have a chance to stay at current levels.

Thus, the pause in the actions of the RBA is not based on stability at all and not on the positive result achieved after two rate cuts. However, on the fact that a further reduction without a pause can cause a panic and flight of investments from export-oriented industries. But this is exactly how investors will assess the situation, so there is no reason to expect an increase in demand for Aussies.

The Australian dollar remains under pressure while the support zone of 0.6675/6705 is still holding, but a lower move seems inevitable. In the coming days, data will be published on GDP and on PMI in the services sector. Any indicator that is below forecasts will be able to act as the driver that sends AUD deep to the south with the support of 0.6511 serving as a guideline.