It’s the season of good cheer for the Australian economy as data shows signs of a snap back whilst Brexit uncertainty continues to shape movements against the pound.
Australia’s economy continued its impressive recovery as economic data shows confidence returning to pre pandemic levels. Against sterling it fluctuated depending on Brexit news while it gained against USD and EUR.
All pairs against sterling are driven by Brexit. The dollar was up at 0.559 early on before dropping to 0.554 with Johnson heading to Brussels to break the deadlock. Since then it has been climbing to 0.557. Until we hear solid news rumour will continue to drive this pair.
The Eurozone is benefitting from some slightly positive economic data as trading begins on Tuesday. Even so, the Australian dollar is up overall over the past day. It rose from 0.609 at the start of the day to hit a peak of 0.6139 before settling to 0.612 at the time of writing.
The Australian dollar rose $0.74122 to $0.74160 on the release of the positive economic data. At the time of writing the Aussie dollar was trading at 0.74298, up from 0.7388 a day ago. The dollar continues to struggle against economic headwinds, disappointing jobs data and the prospect of an economic stimulus.
Good News on the Economy
Australia continues to enjoy good economic news. House prices rose by 0.8% in the third quarter after a 1.8% decline in Q2. This was significantly higher than the 1% fall economists had forecast.
The NAB Business Confidence Index is back to pre COVID heights. It rose nine points to 12.00 in November and the business conditions index rose by seven points to nine. Confidence is surging in all states, particularly New South Wales and Victoria. Trading and profitability conditions rose by ten points however the employment index remains unchanged at -5 points.
The ANZ Consumer confidence index is also up for the 13th week out of 14th. It grew 1.8 points to 109.3 as more Australians say now is a good time to buy household items. ANZ pointed to a ‘snap back’ of sorts with consumers increasingly willing to loosen the purse strings.
This is also the first time consumer confidence has been higher than a year ago since June 2019, nearly a year and a half ago. The news will reinforce the impression that the economy is tentatively emerging from the other side of the pandemic. Even so, the recovery remains fragile.
Meanwhile, the exports sub-index also remained unchanged at -4. The forward orders sub-index rose from -3 to +6. The news reinforces the impression that Australia has had ‘a good pandemic’. COVID cases are under control, a vaccine is on the way and the economy is recovering. With sentiment edging up and demand for risk assets rising the scene is well set for AUD.
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