- Both NAB business conditions and business confidence index for February missed estimate.
- The details show a marked deterioration in the forward-looking indicators. The AUD, therefore, risks falling further toward the 5-day MA support, having backed off from the session high of 0.7081 hit earlier today.
AUD/USD is currently trading in the red at 0.7060, having hit a high of 0.7081 earlier today and may fall further toward the 5-day moving average (MA) 0.7044, courtesy of below-forecast business survey indices released a few minutes before press time.
The National Bank of Australia’s (NAB) business conditions index fell by 3 points to +4 index points in February, driven by declines in profitability (now +1) and trading (+8) sub-indexes. The markets were expecting the conditions index to slip to +5 index points from the January figure of +7 index points.
Meanwhile, business confidence index also deteriorated to +2 index points in February from +4 index points in January. Employment was unchanged at +5.
Notably, forward-looking indicators are pointing to ongoing weakness in business conditions. Confidence remains below average, forward orders are negative and capacity utilization is trending lower, according to Alan Oster, NAB Group Chief Economist.
Therefore, both investment and hiring could see a pronounced slowdown in the near future, putting more pressure on the RBA to cut rates twice this year, as anticipated by most investment banks.
Looking at the NAB data, the path of least resistance for AUD/USD appears to be on the downside. The 5-day MA support of 0.7044 could come into play later today, but may not be breached if the Asian and European equities trade on the offensive.
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