Any temporary momentum for a move higher in AUDUSD evaporated following a pessimistic confidence report published by the National Australia Bank.  The quarterly survey found that business confidence had fallen to an almost 1 1/2 year low – declining to a reading of -4 in the third quarter.  The results reversed the positive 6 reading seen in the second quarter, leading the Australian dollar lower against the US dollar in Asian session trading.

Falling to trade at 1.0221 at the time of writing, the Australian dollar had been bid up as high as 1.0263 prior to the release.

Details of the NAB survey also showed that the current outlook remained grim as the global economic and domestic slowdown had severely dampened profitability and sales for many of the countries major companies.  This resulted in lowered forecasts for future capital spending plans, with intentions for the next 12 months dropping to an index reading of 21 from a previous release of 29.

Employment expectations also fell, as major companies surveyed revealed plans to freeze hirings till signs of an economic rebound could be obtained.

These latest signs of a slowdown in the Pacific economy will likely boost speculation that the Reserve Bank of Australia will side with a near term rate cut sooner than later in order to compensate for slower expansion potential.