AUD/USD loses strength after NAB survey

Australian dollar traded lower and in proximity to six-week lows against its US counterpart on Tuesday, after the National Australia Banks (NAB) survey on business confidence for October revealed that a persistently expensive national currency is obstructing business projects.

AUD/USD reached a session low at 0.9326 at 7:05 GMT, after which consolidation followed at 0.9331, losing 0.31% for the day. Support was likely to be found at October 1st low, 0.9289, while resistance was to be encountered at November 11th high, 0.9390.

According to NAB survey results, business confidence in Australia fell to +5 in October from a 3.5-year high at +12 in September. The gauge of business conditions remained without change at -4 in October. The National Australia Bank also pushed back its prediction that the Reserve Bank of Australia (RBA) may reduce its benchmark rate to May from February, stressing on the slower climb in the rate of unemployment in the country.

“The market has taken on board that things are improving perhaps not only not as fast as people thought, but not at all,” Ray Attrill, the Sydney-based global co-head of currency strategy at NAB, cited by Bloomberg. “The sentiment at the moment is a little bit bearish on the Aussie, which essentially means that news that can be seen as negative is likely to resonate.”

Traders saw a 16% probability that the RBA will reduce the benchmark interest rate from the current record low level of 2.5% by February, while the odds of such a move were 22% at the start of November, swaps data compiled by the same media showed.

The yield on Australian benchmark 10-year bonds climbed seven basis points, or 0.07 percentage point, to reach 4.29%, or the highest level since March 2012. Yesterday bonds yielded at 4.22%.

Meanwhile, in China, President Xi Jinping and top Communist leaders are gathered in Beijing in order to set economic and social policies during the next decade. Markets were keenly anticipating any timetable for full convertibility of the Chinese yuan.

At the same time, the US dollar was still supported after on Friday the Bureau of Labor Statistics said that employers in the United States unexpectedly added more job positions than projected in October. Non-farm payrolls increased by 204 000 in October, well above the expected 120 000 new jobs and above the revised up number of 163 000 jobs, added in the previous month. This data boosted speculation that the Federal Reserve Bank may consider a pare back of its stimulus program sooner than expected.

Elsewhere, the Aussie was lower against the euro, with EUR/AUD cross advancing 0.24% on a daily basis to trade at 1.4362 at 7:41 GMT. AUD/NZD pair was trading steadily at 1.1344 at 7:42 GMT, dipping 0.03% for the day.