Australian Consumer and Business confidence improves - but AUDUSD in wait and see mode

Research
Tony Sycmore
By :  ,  Market Analyst

 

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This morning saw the release of Australian Business and Consumer Confidence data, framed against surging prices and a fourth consecutive 50bp rate hike from the RBA last week. 

Extending its rebound from the June low of 1 point, the NAB Business confidence index rose by 2 points (in August) to 10 points. Current business conditions edged 1 point higher to 20. New orders and trading activity also ticked higher while Input and Final prices eased slightly, albeit from very elevated levels.

NAB Group Chief Economist Alan Oster said, “We continue to expect that inflation and rising interest rates will eventually begin to weigh on the household budget. So far, however, it appears this dynamic is yet to take hold.”

Ending a run of nine consecutive falls, the Westpac-Melbourne Institute of Consumer Sentiment lifted by 3.9% in September to 84.4, although it remains in recessionary territory.

Within the details, a broad-based improvement in expectations was noted, likely helped by lower petrol prices, a strong labour market, and the shock value of the aggressive RBA rate hikes wearing off. 

In this case, the RBA will need to continue tightening further into restrictive territory if they wish to tame spiralling inflation and a tight labour market. The release of labour force data on Thursday is expected to show the unemployment rate remained at a 50-year low of 3.4% in August.

The AUDUSD is currently trading near .6870, consolidating its rebound from ahead of the June .6681 low following stronger China loan growth data on Friday and as the U.S dollar eased ahead of the release of inflation data tonight in the U.S.

After clearing resistance .6870/50 and assuming no nasty shocks are revealed in tonight’s inflation data, the AUDUSD looks set to make further gains towards the .6950 area.

 

AUDUSD daily chart 13th of Sep

 Source Tradingview. The figures stated are as of September 13th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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