Australian shares fell on Tuesday as a growing number of new corona virus cases in the country’s most popular state created fears of a second wave of infections. New South Wales reported on Monday 14 new cases of COVID-19 at a pub used by freight drivers, right away after a surge of infections in the neighbouring Victoria state, which went back into lock-down last week.
According to the NAB Business Confidence, both the business conditions and confidence continued to rebound but they are still very weak in level terms. Nonetheless, while the rebound has been significant, conditions remain deeply negative and well below average – reflecting the fact that activity still has some way to go before a full recovery can be declared. Unsurprisingly the services sector suffers and continues to show the weakest outcomes, but of some concern are construction and manufacturing which also remain weak – pointing to second-round impacts on industries that were not directly impacted by lock-downs.
According to Mr.Alan Oster, NAB Group Chief Economist “the conditions index continued to rebound in June, recording another large rise. The increase was broad-based across industries but it is important to remember that given the prior large fall conditions still remain very weak overall”.
Mr.Oster told that “Like last month, the improvement in trading conditions and profitability lines up with our internal NAB data which suggests a significant improvement in activity. However, it is important to remember that survey indicators in level terms are still very weak and business is nowhere near back to normal. Likewise, the improvement in the employment index is very welcome but is at a very low level and suggests that the labour market has a long way to travel before we can claim a full recovery” said Mr. Oster.
Additionally, the NAB’s business conditions unexpectedly climbed to -7.0 in June, confounding market expectations for a drop to a level of -39.0 and compared to a reading of -24.0 in the earlier month. Elsewhere, in China, Australia’s largest trading partner, trade surplus narrowed more-than-expected to $46.4 billion in June, compared to a surplus of $62.9 billion in the previous month.
AUD/USD 4 Hour Chart:
Support: 0.6921 (S1), 0.6903 (S2), 0.6867 (S3).
Resistance: 0.6975 (R1), 0.7011 (R2), 0.7029 (R3).
Instead of the fact that the NAB’s business confidence shows a positive result, the rising cases of COVID 19 cases in Australia weighs on Aussie. We expect a Bearish trend for AUD/USD.
