Australian Business and Consumer Sentiment
Business reported another strong month of sales and profitability, although a dip in new orders and rising costs weighed on sentiment. Whilst consumer-driven demand remains high, National Australian Bank’s chief economist noted that forms appear wary that the current pace of consumption will continue.
PMI survey’s for Australia continue to trend lower with the S&P global composite below 50, with services PMI dragging the composite lower. Manufacturing, services and construction PMI are all below 50 according to another PMI survey by AIG. Put together it makes to wonder if growth for 2023 will have to be revised lower, as consumer spending appears to be propping up the show.
AUD/USD remains within a bearish channel on the daily chart, although has entered a corrective phase after finding support above the 2020 monthly close low. A large bullish engulfing candle formed on Friday and it looks like the market wants to test the 0.6535 resistance area.
EUR/AUD is consider about seeing another bout of Aussie dollar weakness in EUR/AUD. Large speculators are increasingly net-long EUR/USD futures and remain net-short AUD/USD futures, which is effectively the view of bullish EUR/AUD.
A strong bullish trend developed on the daily chart since the August low and prices have since been retracting within a potential bull flag pattern. Friday’s spike lower found support at the July high and prices are now holding above the monthly pivot point and July high. From here’s we’re waiting to see if momentum turns higher in line with its trend, to bring the resistance zones around the monthly R1 and R2 into focus.