The Australian dollar has edged higher in the Tuesday session. Currently, AUD/USD is trading at 0.7361, up 0.19% on the day.
NAB Business Confidence rebounds
Australia’s business sector is showing renewed optimism about the economy. The NAB Business Confidence report bounced back in impressive form in September, after back-to-back declines. The index came in at +13, up 19 points from the August reading. The strong gain was driven by improved confidence after the states of New South Wales and Victoria announced reopening plans, as well as an increase in vaccination rates. As well, the surge in commodity prices has boosted the export sector and improved business confidence.
Australia has abandoned its ‘zero Covid’ policy, which had worked well until the Delta variant sent infection rates higher, in favor of ‘living with Covid’. The prolonged lockdown restrictions are scheduled to be lifted during October and November. This should translate into stronger economic activity, which would be bullish for the Australian dollar.
Investors will next turn their attention to the mood of consumers, with the release of Westpac Consumer Sentiment later today. The index showed a solid 2.0% gain in August, and another strong reading could lift the Australian dollar.
There have been concerns about economic growth, with RBA Governor Lowe saying that he expects negative growth for the third quarter. However, any fallout is a ways away, as GDP will not be released until the first week in December. We’ll get a look at employment numbers on Thursday. August was a disaster, as the economy shed 140 thousand jobs, a much higher decline than the consensus of around -80 thousand. Another triple-digit decline would alarm investors and likely send the Australian dollar to lower ground.
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AUD/USD Technical
- AUD/USD faces resistance at 0.7403. Next, there is resistance at 0.7468
- The pair has support at 0.7244. Below, there is support at 0.7177
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Kenny Fisher
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