A survey by the National Australia Bank (NAB) showed an increase in Australian business confidence, indicating that firms are feeling more optimistic about the global economic recovery.
The report released on Tuesday shows a sharp rise in the index to plus 3 points in December, which much better than the previous level of minus 9 in November.
After the data, the Australian dollar rose to $1.0452 versus the USD, up from $1.0398. The sharp movement in the index attracted investors attention and caused a rally in the aussie, lifting it by over half a cent against the US dollar. Yesterday, the Australian dollar fell to its lowest level in almost a month.
Today’s upbeat news was a relief to markets and especially to Australian investors who recently had a bleak outlook for the local economy, with the mining investment boom believed to be near its peak.
Also the nation’s largest trading partner, China, was in a slump. The Australian economy is heavily dominated by the resource/ mining sector.
Recent signs of a pick up in the Chinese economy is also supportive of the commodity-linked aussie.