- Australian business conditions improve
- Australian consumer confidence expected to decline
- AUD/USD continues strong rally
The Australian dollar continues its impressive rally which started on May 2nd. AUD/USD has surged 2.6% during that time. The pair is trading at 0.6788, up 0.53% on the day.
Australia kicked off the new trading week with the NAB Business Survey for April. Business confidence improved from -1 to zero, while business conditions eased slightly, from 16 to 14 points. The NAB survey noted that business conditions remain at above-average levels, buoyed by strong demand and the robust labour market.
Australian consumer confidence expected to decline
The markets are bracing for some soft releases this week. We’ll get a look at quarterly retail sales, which are expected in at -0.4% in the first quarter, after a -0.2% reading in Q4 of 2022. This will be followed on Wednesday with consumer confidence, with the markets braced for a decline of -1.7% after a sharp gain of 9.4% in April. If these releases are soft, that could be the end of the Aussie’s current rally.
A strong US employment release on Friday gave a boost to risk sentiment, and AUD/USD surged 0.88%. Nonfarm payrolls surprised on the upside, rising to 253,000, versus the consensus estimate of 179,000. This follows a March gain of 165,00, revised down from 236,000. Wage growth ticked up to 4.4%, above the upwardly revised 4.2% gain in March and above the estimate of 4.2%. Unemployment fell to 3.4%, down from the March reading of 3.4% which was also the estimate. The strong numbers may force the Fed to continue raising rates in order to cool down the economy, but the US dollar was unable to take advantage and was down against the Aussie and other risk currencies on Friday.
- AUD/USD is testing resistance at 0.6803. Above, there is resistance at 0.6896
- 0.6706 and 0.6654 are providing support
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