The Australian Dollar edged lower through trade on the public holiday Monday as risk appetite turned negative and investors sold into rallies approaching 0.72. Having touched intraday highs at 0.7205 the AUD faded through late afternoon trade and the transition into the European session as weak earnings from the US hurt equities and basic commodities, driving down the global risk mood. Slipping to intraday lows at 0.7161 the AUD found support in stronger spot iron ore prices; the key export rallied nearly 5% touching highs not seen in 10 months, underpinning the AUD.
As Australian investors and liquidity return to the market after the long weekend our attentions turn to NAB Business confidence index for macroeconomic direction, with the RBA focus drawn to the conditions index as a measure of business activity and a marker of overall economic health. While broader confidence has fallen in recent months the conditions index has enjoyed a greater level of stability and a strong read could help alleviate and assuage fears the RBA is barreling toward a cut in interest rates.
We anticipate the AUD will remain larger range bound through the short term, with key technical supports propping up dips toward 0.7140 while resistance on moves above 0.72 and approaching 0.7230 intact. At time of writing the AUD sits in the middle of said ranges buying 0.7170 US cents.