"Business conditions recorded a surprising jump to a more than two-and-a-half year high in December – cementing the upward trend seen over recent months – supported by the low interest rate environment, higher asset prices and less elevated Australian dollar"
- The National Australia Bank
Australian currency moved further away from the desired by the RBA level on Tuesday, as consumer confidence and business conditions improved. Earlier this month Glenn Stevens claimed he will welcome AUD/USD around $0.85 level, the pair, however, moved closer to $0.88, rising more than 0.3% on the back of positive fundamental data.
The National Australia Bank said a gauge of business confidence remained steady at 6 last month, after November's reading was upwardly revised to 6 from 5. Any reading above 0 indicates improving conditions. What is more important, is the fact an index of current business conditions soared 7 points hitting 4 from –3 a month earlier and bucking a 15-month streak of negative readings. Moreover, the trading conditions subindex rocketed to 12 from –2 in the previous month, pushed higher by record-low interest rates as well as rising stocks and house prices. Nonetheless, employment conditions still remained the weak point, reflecting a flat job market.
The latest data diminishes hopes of another rate cut from the RBA, as improving business conditions and rising inflation leave less room for policymakers for another manoeuvre.
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