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Eyes 3-month lows as NAB’s Australian business confidence drops to lowest since mid-2013

  • AUD/USD risks printing multi-month lows below 0.6750 on weak data. 
  • Australia’s Business Confidence dropped to multi-year lows in December. 
  • Coronavirus scale is likely to keep the AUD on the defensive. 

AUD/USD looks set to print a 3.5-month low below 0.6750 with Australia’s business confidence gauge hitting multi-year lows. 

The currency pair is currently trading at 0.6753, representing marginal losses on the day, having hit a high of 0.6762 a few minutes before press time. 

National Australia Bank’s (NAB) Business Confidence weakened in December, falling 2pts to -2 index points, the lowest read since mid-2013. Meanwhile, Conditions edged 1pt lower in the month to +3 index points – another below-average result and one that is well below the level seen in early 2018, according to the official report.

Business Confidence was seen rising to 1 from November’s 0 reading, while Conditions was forecasted to drop to 3 from November’s reading of 4. The US-China trade tensions ebbed significantly in the final months of 2019, even so, Australia’s Business Confidence fell into the negative, possibly because the nation battled devastating bushfires in the final month of the year. 

A sustained drop in the Business Confidence may force the Reserve Bank of Australia to take aggressive easing measures. Currently, the central bank is expected to keep rates unchanged at the Feb. 4 meeting and cut rates by 25 basis points in April. 

Even so, AUD/USD may continue trade on the defensive during the day ahead, courtest of growing fears that China is struggling to contain the deadly coronavirus. 

Technical levels

 

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