The Australian dollar was rising at the start of Tuesday’s session but has reversed movement and is now trading below the opening level against most major currencies, though currently, it has managed to rise against the US dollar a bit. The Aussie performed better against its commodity-linked counterparts.
According to the Business Confidence Survey released by National Australia Bank today, the confidence index dropped to the lowest level on record. The report said:
The impact on the business sector of Coronavirus containment measures has been immediately obvious. Business confidence saw its largest decline on record and is now at its weakest level in the history of the NAB business survey (including the quarterly). This is somewhat unsurprising given the recent escalation of widespread containment measures, which are unlikely to be lifted in the near-term and the risk of further escalation.
The index plunged sharply from -2 in February to -66 in March. The business conditions also sank, falling to -22, but the report noted that it was still far above the lows the indicator has reached during the economic recession in the nineties. Alan Oster, NAB Group Chief Economist, expressed his view on how the economy will behave in response to the current crisis:
We expect a recession of unprecedented speed and magnitude for the Australian economy over the next three quarters. This will see a sharp increase in unemployment. Policy makers have made a huge response that we think will be unable to the negative prints we will see in economic data in the near term but we are optimistic these actions will support a solid recovery once the virus is contained.
Meanwhile, according to data from China, Australia’s biggest trading partner, the trade balance recorded a surplus of $19.9 billion in March after logging a deficit of $7.09 billion in the previous month. Markets were expecting a bit smaller surplus of $19.7 billion. Both exports and imports fell, by 6.6% and 0.9%, year-on-year, respectively. But the drop slowed compared with the previous month and was nowhere as bad as analysts were predicting — a drop of 14.0% for exports and 9.5% for imports. The data added to evidence that the Chinese economy is recovering from the coronavirus outbreak, and that bodes well for economies of its trading partners, including Australia.
AUD/USD was up from 0.6380 to 0.6399 as of 12:22 GMT today but retreated from the daily maximum of 0.6432. AUD/JPY was about flat at 68.68, pulling back from the session high of 69.26. AUD/CAD fell from 0.8871 to 0.8849 intraday but bounced to trade at 0.8903 later.
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