Aussie Dollar Gains as Business Confidence Firms, Boosting RBA Outlook
• NAB Business Confidence comes in at 8; Prior month 7
• NAB Business Outlook comes in at 2; Prior month -1
The Australian Dollar traded higher against its US counterpart as National Australia Bank (NAB) reported its Business Confidence Index and Business Conditions Index figures for the month of June. The Business Confidence Index came in at 8, a point higher from last month, and the highest since January of this year. The Business Conditions Index reported its largest jump in six months coming in at 2, 3 points higher from the prior month.
The Aussie’s advance tracked a pickup in 2-year Australian bond yields, hinting the improved readings were seen as a boost to investors’ RBA policy expectations. Traders look to the two NAB indexes to imply the likelihood of an expansion or a contraction in Australian economic growth in the coming months. An expansion in the economy increases expectations of an increase in interest rates in the future, which typically bodes well for the relevant currency.
FXCM’s Real Volume Indicator showed a sharp spike in trading volume as the NAB data set crossed the wires. A pick up in volume is often seen as an indication of conviction that raises the probability of follow-through by investors.
AUDUSD [15 mins – 07/08/2014]. Created using FXCM Marketscope.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.