Aussie edges higher on business confidence

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

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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