The Australian dollar failed again at 77 cents in the past 24 hours but still outperformed its other peers.
With a showing of a high of 0.7696, “It’s an outperformance that speaks to continued support for the Aussie as the positives stack up,” said Greg McKenna, chief market strategist at CFD and forex provider AxiTrader.
The Aussie dollar also outperformed against the Kiwi and CAD as well as the majors, with the high of 0.7696 coming after a solid NAB business survey and a weaker US dollar.
But it subsequently plunged to 0.7619, “after Fed chair Janet Yellen reaffirmed that the Fed will be looking to increase rates at its “upcoming” meetings,” said McKenna.
Consequently, according to McKenna, “The Aussie’s underperformance against the surge in the South African rand and Brazilian real suggests this graveyard above 77 cents still has the bulls spooked.”
Yesterday’s NAB business survey was post-crisis high but seemed to just not hold enough surprises to catapult the Aussie dollar past 77 cents.
McKenna explained that the survey result was accompanied by a lift in confidence of 4 points to 10 and a strong showing for trading conditions, profitability, and crucially employment which jumped to 7, the highest level since 2011.
“These are unequivocally strong results and reinforce the message from the Reserve Bank governor and the board that the Australian economy is bouncing back from the third quarter 2016 soft patch,” he said.
More than that, McKenna sees these indicators as proof not just of economic recovery, but accelerated growth.
“The fact that business conditions, confidence and the sub-indexes are the strongest they have been in years suggests the very acceleration of growth that the RBA has been hinting at since last November,” he said.
He added: “It’s also worth noting the fact he said the bank is not worried about 2017 but rather sees a slowdown coming in 2018.”
Ultimately, the market has to wait until tomorrow to see if employment data backs up the NAB survey.
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