Australian consumer and business confidence improving, but AUDUSD in wait-and-see mode
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This morning saw the release of Australian business and consumer confidence data, framed by a surge in prices and a fourth straight rate hike of 50 basis points by the RBA last week.
Extending its rebound from the June low of 1 point, the NAB Business Confidence Index rose 2 points (in August) to 10 points. Current trading conditions edged up 1 point to 20. New orders and trade activity also increased while input and final prices fell slightly, albeit from very high levels.
NAB Group Chief Economist Alan Oster said: “We continue to expect inflation and rising interest rates to eventually weigh on household budgets. So far, however, it seems that this dynamic has not yet taken hold.
Ending a streak of nine consecutive falls, the Westpac-Melbourne Institute of Consumer Sentiment rose 3.9% in September to 84.4, although it remains in recessionary territory.
In detail, a broad-based improvement in expectations was noted, likely helped by lower gasoline prices, a strong labor market and the shock value of the RBA’s aggressive rate hikes.
In this case, the RBA will have to continue to squeeze further into restrictive territory if it wishes to rein in spiraling inflation and a tight labor market. The release of labor force data on Thursday is expected to show that the unemployment rate remained at a 50-year low of 3.4% in August.
AUDUSD is currently trading near 0.6870, consolidating its rebound ahead of the June low of 0.6681 after stronger Chinese loan growth data on Friday and as the US Dollar eased ahead of the release. inflation data tonight in the United States.
After breaking through the .6870/50 resistance and assuming no nasty shocks are revealed in tonight’s inflation data, the AUDUSD looks set to make further gains towards the .6950 area.
Source Tradingview. Figures shown are as of September 13, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and should not be deemed to contain financial product advice or financial product recommendations.