Aussie steady as confidence data softens
|-
Consumer confidence slides.
-
Business confidence eases while business conditions improve.
The Australian dollar has edged lower on Tuesday. In the European session, AUD/USD is almost unchanged, trading at 0.6376.
Australian consumer, business confidence eases
Australian consumers have been hit hard by high inflation and steep interest rates, so it’s no surprise that consumers are deeply pessimistic about the economy. The Westpac Consumer Sentiment index declined by 2.6% in November, down from 82 to 79. The RBA’s recent rate hike certainly didn’t boost confidence, as consumers expect mortgage rates to continue rising over the next 12 months.
The NAB Business Confidence index fell to -2 in October, down from a revised zero in September. This was below the market consensus of 1 and was the lowest level since May. The silver lining was an improvement in business conditions, which rose in October from 12 to 13.
The Reserve Bank of Australia raised rates earlier this month after four consecutive pauses. Is the RBA done with its tightening cycle? The central bank meets next on December 5th and has stressed that future rate decisions will be based on the data. Australia releases retail sales and inflation reports a week prior to the meeting, and these releases could determine whether the RBA hikes again or pauses.
The US releases the October inflation report later today. The release could provide clues as to how long the Fed plans to keep rates at elevated levels. Headline inflation is expected to rise 3.3% y/y, compared to 3.7% in September. The core rate is expected to remain unchanged at 4.1% y/y.
The markets have priced in a rate cut in mid-2024 and an unexpected inflation reading would likely lead to the repricing of a rate cut. The Fed has pushed back against talk of a rate cut, as inflation remains well above the 2% target. The markets haven’t been listening to the Fed, but they’ll be keeping a close eye on the inflation report.
AUD/USD technical
-
AUD/USD continues to put pressure on support at 0.6351. Below, there is support at 0.6292.
-
0.6408 and 0.6476 are the next resistance lines.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.