Surprise Increase in AU Business Confidence Helps AUD/USD Exchange Rate Gain
The Australian Dollar to US Dollar (AUD/USD) exchange rate has risen today following a surprise increase in Australian business confidence.
The unexpected rise for NAB’s July business confidence reading has pushed the AUD/USD exchange rate to an interbank level of $0.72.
The NAB data release wasn’t entirely positive, however, and with risk aversion still rife the Australian Dollar’s gains were limited.
Summing up the mixed nature of NAB’s latest findings, NAB Group Chief Economist Alan Oster says:
‘The business conditions index eased further this month, and has now fallen considerably since April.
‘Despite falling over recent months, business conditions remain above average, suggesting favourable conditions have continued to persist through the middle of 2018.
‘The weakness in the month was driven by deterioration in both profitability and trading conditions, which was partially offset by a rise in the employment index
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Dips as CBO Forecasts 2019 Slowdown
Although the US Dollar (USD) has ceded some ground to the Australian Dollar (AUD) today, USD/AUD is still close to its best levels since January 2017.
The recent dip in US Dollar demand has been caused by a cautious forecast from the Congressional Budget Office (CBO); CBO officials have predicted a 2019 US economic slowdown.
The reasoning is that ongoing international trade disputes will take their toll on the US economy, eventually dragging GDP growth levels down to around 2.4%.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Losses Forecast on AU Confidence Data
Today’s tentative Australian Dollar to US Dollar (AUD/USD) exchange rate rise could turn into losses in the near-future, with Australian consumer confidence data out on Wednesday morning.
Westpac’s measure of consumer sentiment levels in August is expected to decline during the month, with a shift from 106.1 points to 103.
Any reading above 100 points means greater consumer optimism rather than pessimism, although a decline for August’s printing could still worsen the AUD/USD exchange rate.
That being said, the US Dollar may also be devalued by the day’s economic data.
US data releases, covering retail sales and output levels, are tipped to show slowing levels of sales activity and a reduction in monthly industrial production levels.
The retail sales figures are considered the more important of the two releases and if July’s reading declines as forecast then USD/AUD exchange rate gains could be limited.