- The Australian Dollar rose on NAB’s business survey
- Confidence slipped back a little but current conditions were assessed as upbeat
- NAB said the survey was consistent with earlier monetary tightening
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The Australian Dollar got only a modest boost Tuesday despite an upbeat assessment of business conditions.
February’s monthly Business Confidence indicator from the National Australia Bank found the conditions index at 21- a record high. However overall business confidence slipped back a little. It came in at 9, below the 11 recorded in January. The employment index surged to points to 16- also a record peak.
NAB said activity was strong and broad based, with all major industry groups reporting better-than-average conditions. It added that the survey was consistent with strong domestic demand. It said that by the end of 2018 the Reserve Bank of Australia should start to feel relaxed enough about domestic fundamentals to start cautiously withdrawing monetary stimulus.
Australian interest-rate futures markets meanwhile do not fully price an increase in the record-low, 1.50% Official Cash Rate until the start of 2019.
AUD/USD gained on the release of the survey, with investors seeming to accentuate the admittedly plentiful positive aspects rather than the more disappointing overall confidence snapshot. However weaker home-loan data for January came out just before the NAB survey and may have taken a little shine off. Loans fell by 1.1% on the month, much weaker than the 0.2% slip forecast.
More broadly the Australian Dollar seems to have benefitted from the revival in risk appetite which has sprung from hopes for a nuclear deal between the US and North Korea, and those very strong US labor-market numbers which saw daylight last week. For now those two factors seem to be outweighing more worrying possibilities, such as an increase in global trade barriers.
On its daily chart AUD/USD has duly bounced from the lows of early March and, significantly, broken above the medium-term downtrend line from the three-year highs marked at the end of January. Now a new uptrend channel from March 1’s lows holds sway and should probably be respected. AUD/USD is currently toward the top of that channel on its daily chart.
The next obvious resistance level comes in at 0.7895. This was February 26’s intraday high and a few closes above it would put the bulls in firm command.
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--- Written by David Cottle, DailyFX Research
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