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11/06/24
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AUD Inches Down as Business Confidence Drops
On Tuesday, the Australian dollar dropped by 0.28%, and AUD/USD traded at about 0.6600, down 0.16% for the day in the European session. There are no economic releases out of the US and NAB business confidence in Australia was weak.
In May, the NAB business confidence index in Australia dropped to -3, down from April’s revised 2 and lower than the forecast of 0.
This was the first negative reading since Jan. and the index’s worst performance since Dec. last year. The results indicate that sluggish economic conditions have continued into Q2.
The business sector will not likely show more optimism until Australia’s Reserve Bank starts cutting rates, which may not happen until late in this year or early next year.
Inflation has remained stubbornly high, and according to Governor Bullock, the central bank could hike rates if the downtrend in inflation stalls. Although this scenario is unlikely, it shows that the RBA is still hawkish and rate cuts won’t be done soon.
On Wednesday, the US May inflation report will be released, and the Fed will make its rate announcement. It is expected headline CPI will stay unchanged at 3.4% y/y and Core CPI is forecast to drop to 3.5% from 3.6%.
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