ASIA MORNING CALL: Data focus to fuel AUD rally

*AUD sees Business Confidence surveys
*CNH also gets CPI and PPI data 
*Overnight GDP beats lift FX performance

Historical NAB Business Conditions Survey. Source: Thomson Reuters

AUD rally could continue...

Look to 11.30am AEST today for NAB Business Confidence surveys, a monthly index that indicates improving (above 0) or worsening (below 0) sentiment amongst Aussie businesses. The survey has become more closely monitored over time and could add to recent AUDUSD strength if we see an improved print here. 

Breaking it down, I think with the confluence of 1) 50bps of rate cuts in June and July; 2) low and middle income tax offsets; 3) August employment data around the mark; and 4) a potentially bottoming in Melbourne and Sydney housing prices - we see a NAB Business Confidence print that indicates some momentum pick-up in the Australian economy. Though, I'd remain cautious with the recent Aussie GDP print still at depressed levels, and weak global outlooks and trade uncertainties still at the fore. Furthermore, given this is an August print, don't expect China's liquidity injection last Friday to impact.

Look for AUDUSD to continue edging higher if a positive survey beat comes, with strong momentum on the daily stochastic slow and AUS 10y yields up 16bps since prior Monday. 

CNH to remain weak... 

USDCNH also sees PPI y/y and CPI y/y data at 11.30am AEST today with consensus at -0.9% and 2.6% respectively. Both figures are lower verse prior July prints (-0.3%, 2.8%), with headline CPI - arguably more closely watched - looks to be coming off driven by moderating fruit prices. 

With forecast headline CPI inflation of 2.6% y/y below China's 3% inflation policy target, and US-China trade talks still some ways apart on agreement on security elements, Chinese monetary policy will look to remain accomodative going forward. 

USDCNH appears supported at 7.1-7.112. 

FX takes lead from GDP beats yesterday...

Overnight, volatility crept back into FX after a settled start to the week, spurred by a positive UK GDP print of 0.3% m/m vs 0.1% consensus, taking UK's GDP y/y figure to 1.0% above 0.8% expected. GBPUSD tested 1.2350 resistance, up 120pips through the move, as a result. 

Closeby, Norway also saw GDP outperformance for July growing at 1.0% m/m vs 0.3% consensus. Though it lifted NOK, with USDNOK down -0.73% yesterday, today's 4pm AEST CPI print will be of greater relevance and therefore have a greater impact. A strong inflation print would further support the case for a divergent hiking cycle by Norges Bank, Norway's Central Bank. Look for EURNOK and USDNOK to push lower.