AUD/USD – Aussie shrugs as business confidence falls, RBA review released

• Australian Business Confidence and Business Conditions fall
• RBA review calls for overhaul of central bank
• Governor Lowe says willing to continue

AUD/USD is almost unchanged, trading at 0.6714

Australian Business confidence declines again

The NAB Business Confidence Index declined for a second straight quarter, falling by 4 pts. This missed the estimate of 2 and follows a Q4 2022 reading of -1. Business Conditions also dropped by 4 pts. The NAB found that businesses remain most concerned about wage growth and continue to report a shortage of workers. The good news was that supply chains have improved and there are expectations that inflation may have peaked.

RBA review calls for major overhaul of central bank

Australian Treasurer Chalmers released the findings of a review of the Reserve Bank of Australia today. The central bank last underwent major changes in the 1990s and the report had some 51 recommendations. The key suggestions include setting up a separate policy board, press conferences after each policy meeting and reducing board meetings from 11 to 8, in order to give households more time to react to rate decisions.

The changes are not expected to affect rate policy and the markets shrugged as the Australian dollar is drifting today. The report did not make any recommendations regarding the future of Governor Lowe, whose mandate expires in September. Lowe welcomed the report’s recommendations and said he would be happy to continue serving if ask to do so by the government.

Lowe has absorbed heavy criticism for the sharp rise in rate hikes after stating in 2020 that rising inflation was transient and the RBA would not raise rates for three years. This forecast was of course way off the mark and the RBA has raised rates some 350 basis points over the past year, which has weighed heavily on households as mortgage payments have soared.

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AUD/USD Technical

• There is resistance at 0.6803 and 0.6896
• AUD/USD is testing support at 0.6711. Next, there is support at 0.6618

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