Talking Points
- The NAB business confidence index slipped in May
- But given mounting global uncertainties, it might have been more surprising if it hadn’t
- AUD/USD barely noticed the release, which will have little effect on monetary-policy expectations
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The Australian Dollar didn’t move far Tuesday despite news of a deterioration in its homeland’s business sentiment.
The May business confidence index from major local lender National Australia Bank (NAB), came in at 7. That was a very sharp fall from April’s 13 level. However, that always looked a little spurious with readings much above 7 quite rare over the past twelve months. The long-run average is 6 after all.
The assessment index of business conditions also eased back, but to a much lesser extent. It came in at 12, just below a downwardly revised 13 for April. All up it’s hardly surprising that uncertainty should have increased in the last month. Swirling international news stories such as the testimony of dismissed Federal Bureau of Investigation Director James Comey in the US, and the narrowing of election polls in the UK which, as it turned out, lead to the lack of any overall majority in the crucial Brexit parliament are not exactly the stuff of commercial confidence.
Still, NAB said that the business sector is in fact quite upbeat with the exception of the retail sector where conditions look much more neutral. AUD/USD investors seemed to agree, with the data having very little effect on the pair.
In any event the Reserve Bank of Australia is not expected to alter its current, record-low interest rates for the remainder of this year and, possibly, well into next. The next major economic event for the Australian Dollar will probably be Thursday’s official labor-market statistics which will be covered live via a DailyFX webinar.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
