The Aussie traded higher against the US Dollar as Australian business sentiment showed improvement in August. Survey data reported the highest business confidence index level since May 2011 as well as a slight uptick in current conditions. Improving sentiment could drive more activity in the economy and lead investors to reduce their expectations for the Reserve Bank of Australia to cut rates. This release likely reinforces recent positive data coming from Australia’s largest trading partner hinting at the possibility of higher regional growth.
Looking ahead to later today, Chinese retail sales and industrial production due at 5:30 GMT could provide more evidence for stabilization on the mainland. However, disappointing figures could revitalize speculation for RBA easing efforts in the near to medium term and stall the recent Aussie rebound.
Cover the Chinese data live with Currency Strategist Ilya Spivak here at 5:15 GMT.
AUD/USD (5-Minute Chart)
Source: FXCM Marketscope
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Jimmy Yang, DailyFX Research Team