"While a weaker dollar has helped raise returns in export markets and blunted some import competition, it has also raised input costs for some domestic industries that are in no position to pass them on"
-National Australia Bank
It is a good day to trade AUD/USD as the pair penetrated a strong resistance of 0.9528 and moved up to the highest level in four-months after the United States Congress approved a bill ending almost two-week long government gridlock, while a report from the National Australia Bank showed Oz companies felt more confident last month. Companies are benefitting from political and economic factors, like positive results of the federal election, record-low interest rates, improved economic data from China and better consumer mood within the nation. A gauge of business conditions reached 3 in the September quarter, following a figure of -1 in the preceding quarter, and moving into positive territory indicating improving conditions. Australian businesses are ready for a change and showing willingness to increase spending as Tony Abbott swung to a convincing victory during the September elections and already pledged to make the economy once again "open for business".
While overall conditions are getting better, a decline of mining investment forced a measure of business conditions in the mining sector to hit a 14- year low over corresponding period. The deterioration in the key sector for a resource-reach economy is coincided with the slowing in Chinese growth, which is weighing on commodity prices. However, analysts are predicting situation to improve toward the end of this year, due to stronger demand for commodities, and recent depreciation in Aussie.
© Dukascopy Bank SA