The Australian dollar shot higher against the greenback on Tuesday after a business survey revealed a sharp rise in conditions last month in Australia. However, some economists see further downside for the currency as fears over China persist.
National Australia Bank's (NAB) Business Conditions Index surged from 6 in July to 11 last month, the strongest reading since October, where a reading above zero signals an improvement in conditions.
NAB's Business Confidence Index, which is released alongside the Conditions index, fell from 4 to 1 in August, which NAB said was likely the result of recent noise in China.
Recent developments in China, as well as soft data from Australia, have seen the Australian dollar fall to its weakest level since 2009 in recent weeks.
Moreover, China's merchandise trade surplus grew to its largest since May last month, but with a sharp decline in exports masked by an even sharper fall in imports, the situation in China is going from bad to worse. China's trade surplus expanded from $43.03 billion in July to $60.24 billion in August, according to new data released on Tuesday, beating the market forecast of a $49.35 billion surplus last month.
