Talking Points:
- Australian business confidence slipped back in March
- Firms’ assessment of current conditions did too, albeit from notable highs
- The Australian Dollar faltered on the news, but soon picked up again
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The Australian Dollar continued to gain Tuesday after the release of a business confidence survey which failed to match the previous month’s but still showed sentiment holding up quite well.
The March confidence index from the National Australia Bank slipped to 7, which was below the previous month’s 9. The assessment of current conditions index fell harder, to 14 down from February’s record high of 21. That in any case was revised down to 20. Retail confidence continues to lag, NAB said, but it still reached its highest level for nine months.
Chief NAB economist Alan Oster said that the report still showed confidence “well above average” and pointed to “robust” business activity. However, leading indicators such as capacity utilization and forward orders softened slightly albeit from very high levels.
All up this doesn’t seem like an especially poor survey, but the markets have become accustomed to consistent improvement, at least in the current-conditions assessment. The lack of it this month may have hit the Aussie in the immediate aftermath of the release
In any case it looks as though the market was braced for a stronger number with modest gains seen in the runup and, apparently, quickly unwound on the fact. Signs of still-muted inflation probably didn’t help Aussie bulls’ cause either, with interest rates still at record lows and thought unlikely to rise until well into next year.
On its broader daily chart AUD/USD remains dominated by the long downtrend channel which has been in place for much of 2018. The base of its current minor range remains some way below the market but it looks as though the pair is making a new lower high below the previous peak. That was the 0.7730 made last week.
Should this upside failure be confirmed then the range base of 0.7339.5 will come back into bearish focus.
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— Written by David Cottle, DailyFX Research
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