This article reviews the release of stronger Australian consumer and business confidence data and what it means for the AUDNZD cross rate, which market time overnight closing near 1.0350.
The NAB business confidence survey for October released yesterday showed business confidence increased sharply to +21pts from +10pts in September, putting it within reach of the historical high of +24pts in May.
Within the details, a 16pt jump in forward orders was encouraging, as was a lift in the employment index as companies added staff ahead of the reopening.
This morning the Westpac Consumer Sentiment showed similarly. The headline index rose to 105.3 from 104.6 while employment expectations improved to their best level since the mid-1990s, reflecting a high level of job vacancies.
Overall the two surveys point to limited scarring from the lockdowns and indicate the labour market is tightening following the reopening.
An encouraging sign for the economy and the RBA who have noted a tighter labour market and stronger wage growth is required to see inflation sustainably within their target band and the prerequisite for rate hikes.
Tomorrow’s October labour force report will provide further insights into the healing of the labour market, as will next week’s wage growth index for the three months to September.
Providing AUDNZD remains below short-term resistance at 1.0420/30 on a closing basis, the expectation is for the cross to continue to decline towards the bottom of the 15-month trend channel near 1.0250 in the coming weeks.
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