Australian Dollar Gains as Westpac Consumer Index Leaps
- The Australian Dollar got a lift against a generally stronger greenback thanks to a robust consumer confidence survey
- Westpac’s Index on the subject leaped 2.3% in February
- The lender said that strength was broad based
The Australian Dollar gained on Wednesday on signs that consumers in its home country might be much more ready to splurge.
The Westpac consumer confidence index rose 2.3% in February. That was hugely better than the tiny 0.1% upward twitch recorded in January. The survey makes good partner with the business sentiment indicator from National Australia Bank released a day earlier. It showed business confidence sitting pretty around nine-year highs in January.
Westpac’s index now stands at 99.6, above January’s 97.4. Westpac said the sub-indexes which contribute to the headline were broadly higher. It also called the rise a hopeful sign that retail sales’ soft patch has not extended into the New Year.
AUD/USD inched up to 0.76749, from 0.76679 before the Westpac survey saw daylight.
Small boost: AUD/USD
Chart Compiled Using TradingView
While the numbers coming out of the Australian economy certainly seem to have improved since the shock growth contraction revealed in December, it’s possible that interest rate differentials will start to assert themselves once more.
The US Dollar posted general gains in Tuesday’s US session. Federal Reserve Chair Janet Yellen said in testimony to the Senate Banking Panel that it would in her view be unwise to wait too long to raise interest rates again. Yellen said that even though the Fed still intends to raise rates gradually, getting them. back to more usual levels is important.
Market reaction was prompt, with US Treasury yields rising as the markets felt that a rate rise as soon as March was now more possible.
By contrast Australian rates remain at record lows, and are not forecast to rise anytime soon.
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.