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Australian dollar stays in line despite business confidence
By Jessica Sier
The Australian dollar has maintained its tight trading range, even after business conditions soared to a four-year high in July, according to a private survey.
The Aussie was trading at an intraday low of US92.48¢ just before the National Australia Bank survey was released, leaping to a high of US92.69¢ afterwards.
In late afternoon trading on Tuesday the local unit was fetching US92.61¢, largely unchanged from US92.65¢ in Monday’s late session.
The NAB survey found business conditions jumped to 8 points in July, compared with 2 points in June, signalling a strong start to third-quarter demand. Confidence also lifted, rising to 11 points in July, from 8 points in June.
“Those numbers are an unambiguous improvement but I’m quite cautious about reading much into such tin dollar trading ranges,” Michael McCarthy, senior currency strategist at CMC Markets said.
“We saw a tiny jump after the survey, but twenty pips really isn’t anything to write home about.”
Business sentiment has been steadily rising since January, with Tuesday’s conditions recording their highest level since the beginning of 2010.
“Firms still appear unfazed by the federal government’s ‘tough budget’, possibly taking comfort in the bounce back in consumer confidence,” Alan Oster, NAB’s chief economist said.
Traders are still focused on geopolitical tensions in Iraq and Ukraine. Investors have fled relatively high yielding assets to safe-haven currencies like the US dollar and the Japanese yen.
Australian wage figures are slated for release on Wednesday morning.
“If the wage figures show signs of inflation or a weakening, that could have an impact on the Aussie,” Mr McCarthy said. US retail sales are due to be released on Wednesday night.