Australia NAB business confidence dropped to 3 in Q3, down from Q2’s 7. Current business condition dropped to 13, down from 15. NAB noted that “though conditions remain well above average; confidence is now below average”. Meanwhile, “surveyed price and wage variables suggest at present inflationary pressures remain weak.”
On RBA monetary policy, NAB noted that markets are pricing in around 90% chance of a 25bps rate hike in the next 12-months. Pricing increased from 70% back in Q2. NAB’s own view is that “RBA will likely begin a gradual series of rate rises in mid-to-late 2019 but that this is highly data dependent.” NAB saw “inflationary pressures best described as meek at present.”
On exchange rate, NAB revised down its own forecasts on AUD/USD to “closer to US$0.70” as “global trade ructions continue to weigh.”
