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Australian Dollar, National Australia Bank Business Confidence Quarterly, Talking Points:

  • The NAB’s quarterly business survey was downbeat for 2018’s last three months
  • But monthly versions have already told that tale
  • AUD/USD inched down, but this week has perhaps seen damage enough

First-quarter technical and fundamental forecasts from the DailyFX analysts are out now.

A punch-drunk Australian Dollar didn’t move much lower Thursday on yet another gloomy business sentiment survey.

The quarterly snapshot from National Australia Bank showed a confidence reading of just 1 in the quarter to December 2018, down from a previous read of 3. The current conditions assessment fell to 16 from 21. This release comes just after the regular monthly poll from the same organization found businesses similarly depressed. The quarterly reading hardly tells investors anything they didn’t know, however, and the weakening of the monthly survey suggests that the picture may in fact have worsened since the fourth quarter.

In any case the Australian Dollar didn’t fall much further against its US cousin after the survey.

Chart of AUD/USD (5-minute)

On its daily chart, AUD/USD is very much back on the defensive. It had enjoyed some strength this year as markets reassessed the likelihood of many more US interest rate rises, and as commodity prices rebounded.

Still, the Aussie back-pedaled hard on Wednesday thanks to the Reserve Bank of Australia’s admission that record-low domestic interest rates could yet fall further. Previously the regulator had said that a rise was the most likely next move, albeit not anytime soon.

Chart of AUD/USD (Daily)

The pair has now fallen back below the downtrend line which held for much of the time since mid-December. It is now focused on support at the top of the long downward channel which held good for most of 2018.

The Aussie could perk up, of course, especially if China and the US come to a lasting trade accord in the months ahead. Australia has as much skin in this game as any third country, given its strong economic and political links with the main actors.

However, for the moment interest rates are running this table and that likely means the road lower is AUD/USD’s clearest path. Rate futures markets had been pricing in cuts to Australia’s Official Cash Rate for quite some time.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

-- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!