Australian dollar weakens on mixed NAB business survey

27/01/2015 07:02 AST

The Aussie weakened further in Asia on Tuesday on a mixed business confidence and conditions outlook by National Australia Bank.

AUD/USD traded at 0.7906, down 0.24%, while USD/JPY changed hands at 118.57, up 0.10. EUR/USD fell 0.03% to 1.1233.

Japan's service producer price index rose 3.6%, in line with the median forecast for a gain of 3.6%.

In Sydney, the NAB's Business Conditions and Business Confidence for December showed conditions up 4 last month from up 5 in November and confidence at up 2 from up 1 in November.

The November survey saw drops in both confidence and conditions, with confidence at the lowest level since the pre-election jump in mid-2013. The mixed data in December is likely to encourage the market to increase pricing for a near-term RBA cash rate cut from the current record low 2.5%.

Overnight, the dollar slipped moderately lower against the other major currencies on Monday, as fears sparked by anti-austerity Syriza party's victory in Sunday's Greek elections continued to subside in relatively quiet trade.

The euro stabilized as markets shrugged off concerns over Syriza’s pledge to renegotiate the terms of Greece's €240 billion international bailout and reverse many of the austerity measures imposed by the European Union and International Monetary Fund.

Market sentiment continued to be underpinned after the European Central Bank unveiled a €1.2 trillion asset purchase program last week, aimed at combatting slowing growth and inflation in the euro area.

Data earlier showed that German business confidence improved to the highest level in six months in January, easing concerns over the health of the euro zone's largest economy.

The German research institute, Ifo said its Business Climate Index rose to 106.7 this month, above forecasts for 106.3 and up from a reading of 105.5 in December.

Earlier Monday, official figures showed that Japanese exports rose 12.9% in December from a year earlier, the largest gain in a year, fuelling optimism over the economic recovery.

At the same time, the minutes of the Bank of Japan’s December meeting indicated that policymakers are not in a hurry to step up stimulus measures, despite the threat to the inflation outlook from the recent sharp drop in oil prices.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.03% at 95.26.

Investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise.

Friday’s preliminary data on U.S. fourth quarter growth will also be in focus.

Investing.com