- The National Australia Bank’s (NAB) business conditions and business confidence indices bettered estimates, but the Aussie dollar is not impressed.
- The oversold Aussie dollar may pick up a bid if the Chinese yuan posts gains.
The AUD/USD is struggling build on the technical recovery witnessed yesterday, despite the better-than-expected National Australia Bank’s business confidence and business conditions data.
At press time, the AUD/USD is trading at 0.7073, representing moderate losses on the day.
The currency pair rose almost 40 pips yesterday as oversold conditions likely overshadowed the losses in the Chinese yuan and the Shanghai Composite index.
More importantly, the 4-hour chart is now flashing a bullish divergence of the relative strength index. Still, the pair is not responding to positive data release — the NAB September business conditions index came in at 15, beating the estimate of 9 by a big margin and business confidence printed at 6, also bettering the estimate of 5.
Looking ahead, the spot is more likely to extend yesterday’s corrective rally, courtesy of upbeat NAB figures and bullish RSI divergence. The immediate bullish case would strengthen further if the Chinese yuan and the equity markets pick up a bid.
AUD/USD Technical Levels
Resistance: 0.7129 (10-day EMA), 0.7142 (Sept. 17 low), 0.7202 (Aug. 15 low)
Support: 0.7041 (previous day’s low), 0.70 (psychological level), 0.6973 (February 2016 low)