Forex: AUD/USD: Australian Business Conditions up 7 points

on Jan 28, 2014
Updated: Oct 21, 2019
Listen Tuesday, January 28th:_ Late yesterday UTC, the Conference Board (CB) released its Australian Leading Economic Index (LEI), which logged 0.2 percent growth in November, and the Coincidence Economic Index (CEI), which also rose 0.2 percent.

The CB report notes that “gains from the yield spread, building approvals, and money supply more than offset the negative contribution from stock prices”, and that “the strengths among the leading indicators have remained more widespread than the weaknesses in recent months”.
CB also says that in combination the “relatively steady” advance in the two indexes suggests that Austalia’s current economic expansion will continue through the first half of this year, “but the pace of growth is unlikely to accelerate”.

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National Australia Bank earlier today released its Business Confidence Index and Business Conditions indexes for December.
While confidence among the surveyed Australian firms remained unchanged at six points for a third consecutive month, Business Conditions jumped seven points from negative three to plus four, a two-and-a-half-year peak, fuelling optimism that the Australian economy may be close to a turning point.

The rise was “supported by the low interest rate environment, higher asset prices and less elevated Australian dollar,” according to the NAB economists who compile the indexes.
They observe that “confidence has remained surprisingly elevated following the post-election jump, and could potentially remain at these levels for” longer than previously expected, “given that the conditions index has begun to respond”.

HSBC chief economist Paul Bloxham writes today that the increase in Business Conditions provides more evidence that economic growth was rebalancing in the final quarter of 2013.
Bloxham observes that “there are some signs that this was already happening in the fourth-quarter, with the timely indicators of economic conditions – such as retail sales, housing approvals and business conditions – all lifting”.

The HSBC analyst notes that employment data remains weak and that “the labour market lags the economy”, but expects employment growth to pick up early in the year, “as improving conditions in the non-mining sectors” lead to job creation.
HSBC maintains its view “that the RBA’s easing phase is done”.
Following the NAB release, the AUD/USD jumped 0.53 percent to a three-day high at 0.8791, but the 200-hour simple moving average, providing resistance since 15 January, again hindered the pair from going higher. Right now the quote is trading at 0.8773.
In the US today, Durable Goods Orders for December m/m is due out at 13.30 UTC and is expected to rise 1.9 percent, while core orders are forecast to show a 0.7 percent increase.
The CB US Consumer Confidence follows at 15.00 UTC and analysts expect a rise to 78.3 points this month from the prior 78.1.
Resistances today: 0.8760, 0.8795/800 and 0.8825.
Supports: 0.8730, 0.8710 and 0.8680.


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