The Australian dollar fell against the vast majority of its most-traded rivals despite the fact that the business conditions and the business confidence improved last month. Now, traders wait for the consumer confidence index that will be released tomorrow and employment data due for release on Thursday.
National Australia Bank reported that both the business confidence and the business conditions improved in October, though both remained below average. The business confidence rose from 0 to +2, and the business conditions rose from +2 to +3. The uptick in the conditions index was the result of improving trading and profitability, while the employment index remained flat. The report pointed out that the recent interest rate cut had a minimal impact on the business sector:
Acknowledging that the impact of recent rate cuts will take time to flow through the economy, it appears that the support provided by both fiscal and monetary policy this year has done little to offset the slowdown in the business sector.
Alan Oster, NAB Group Chief Economist, commented on the result:
There was a small improvement in both confidence and conditions in October, but both indicators largely point to more of the same for the business sector â that is, the below average run of confidence and conditions has continued following a significant deterioration through the second half of 2018 and through to mid-2019.
He also added:
The business sector has lost significant momentum over the past year or so, putting at risk the optimism around business investment and possibly employment going forward. Overall, we see this as a demand driven issue with private sector demand the weakest since the GFC. It may well be the case that the economy needs further stimulus in addition to the monetary and fiscal support provided so far to support demand and see a lift in business activity and confidence.
AUD/USD edged down from 0.6849 to 0.6842 as of 19:20 GMT today. EUR/AUD was down from 1.6102 to 1.6090 after rallying to the high of 1.6139 intraday. AUD/JPY declined from 74.70 to 74.57, retreating from the daily high of 74.94.
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