AUD/USD slides back to 0.7400 level despite decent Aussie business survey data

• AUD/USD has slipped back to the 0.7400 level from earlier highs in the 0.7430 region.
• The pair failed to derive lasting impetus from a strong NAB business sentiment report.
• Focus is now on US inflation, Fed speak and more Australian survey data.

AUD/USD has waned from earlier session highs in the 0.7430s and is now again flirting with the 0.7400 level, down just under 0.3% on the day despite the release of an upbeat Australia business confidence survey during Tuesday Asia Pacific trading hours. If bearish momentum does build and AUD/USD breaks below the 0.7400 level and Monday’s lows around 0.7390, then technicians would likely target a move towards last week’s lows at 0.7360, which sits just below the 50-day moving average at 0.7369.

Aussie data points to positive 2022 outlook

Australian bank NAB’s Business Confidence index rose to 21 in October from 13 in September, while the bank’s Business Conditions index rose to 11 in October from 5 the month prior. The improvement in business confidence was primarily driven by an easing of lockdown restrictions, local economists said, after the country’s most populous state New South Wales came out of lockdown on 11 October (the data for the survey was collected between 19-29 October). Sentiment also improved in Victoria, where the end of lockdown is in sight, and in Queensland, which should see its state borders reopened before the end of the year. According to local bank Westpac, “the reopening facilitated by high vaccination rates points to a positive outlook for 2022”.

Day Ahead

Looking ahead, AUD/USD traders will focus their attention back to stateside events for the remainder of the US session, with US inflation data and a few Fed speakers in focus. The US Bureau of Labour Statistics will release the October Producer Price Inflation report at 1330GMT ahead of comments from Fed Chair Jerome Powell on diversity at 1400GMT. Thereafter, FOMC members Daly and Kashkari speak at 1635GMT and 1830GMT respectively. Aussie traders returning for the Wednesday Asia Pacific session should keep an eye on the release of Westpac’s November Consumer Confidence survey at 2330GMT.