AUD/USD has edged back up towards 0.6980 post the NAB business survey print. We got close to 0.6970 prior to the data print. Still, the range for the day is not beyond 25pips, so still a quiet session to date.
- The NAB business survey tends not to be a huge market mover, but the headline conditions index shares a reasonable correlation with Australian YoY GDP momentum, see the chart below.
- Conditions rose to +20, versus a revised +14 in June. Confidence also rebounded to +7 from +2 in June.
- The detail of the survey looks fairly solid across the board, with price/cost pressures continuing to firm. Labor costs rose to 4.6% from 3.1%, a fresh record high. Note next Wednesday Q2 wages data prints.
- The AU-US 2yr spread has nudged higher to -52/-53bps from -55bps earlier.
- This result continues to highlight the divergence between business sentiment outcomes and consumer sentiment, recall the earlier Westpac-Consumer Sentiment result dipped further to 81.2, -3% in August. It also defies the gloomier sentiment in major business surveys elsewhere.
- In terms of crosses, AUD/NZD is edging higher, back close to 1.1120. Highs late yesterday were just below 1.1130. AUD/JPY is away from worst levels, last just under 94.00, versus 93.90 earlier.
Fig 1: NAB Business Conditions & Australian YoY GDP
Source: NAB, MNI/Market News/Bloomberg