The Australian Dollar had a decent day on Monday in the Northern Hemisphere. Having stabilized in the low 75’s against the US Dollar Friday afternoon, it traded better right from the off and once it broke through Friday’s 0.7528 high, an improving technical picture helped lift the pair up to a best level in New York of 0.7542 before slipping into the close against a generally well-bid US Dollar.
Though it is now in technically somewhat better shape, the Aussie still needs some better fundamental news if it is to build on yesterday’s gains. With the Reserve Bank of Australia clearly in no rush whatsoever to tighten monetary policy (and now not having another Board meeting for almost two months), the incoming economic data in Australia have been disappointing recently. Last week saw GDP and trade data fall shy of analysts’ expectations whilst the previous week saw softness in consumer confidence, wages and house prices.
Overnight we have seen the latest NAB Business Survey. In the previous survey a month ago, Business Conditions jumped fully 7 points to +21; the highest in its 20-year history. The puzzle then was that Business Confidence was unchanged at +8; only barely above its long-term average. Today the puzzle is solved: the surge in Business Condition was more than fully unwound, tumbling 9 points to +12 whilst business confidence fell 3 to +6. Despite the softness in the headlines, the AUD has taken some comfort from stable employment (+7) and the fact that most measures of activity and confidence are still above their longer-term averages.
For today, AUD/USD opens in London around 0.7545. The two notable technical levels to watch are the 20-day moving average at 0.7577 then last Tuesday’s RBA high of 0.7650. England cricket fans travelling to the WACA in Perth for the third Ashes Test would have done well (and certainly better than their team…) if they’d converted their GBP into AUD last Friday morning. At that point, GBP/AUD was trading at 1.7990 compared to just 1.7690 this morning. A 3-cent move won’t make a huge difference to the price of those consolation beers but every little helps in a crisis!