Talking Points:
- Australian consumers are feeling gloomier according to Westpac’s latest snapshot
- The Australian Dollar market didn’t care much
- The focus is rather on US monetary policy
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An Australian Dollar market waiting like most others for the US Federal Reserve Wednesday didn’t pay much attention to consumer confidence numbers, woeful though they were.
The index on the subject from major lender Westpac fell 1.8% on the month in June, having dropped 1.1% in May. The index itself is sitting at 96.2, well below the neutral level of 100. Westpac itself said that the latest fall puts the index firmly in “pessimistic” territory.
Still AUD/USD barely moved.
Beyond Fed-waiting there are two reasons why this gloomy number might have passed the Aussie Dollar by. The first is that local data are not seen by the market as having much immediate importance as far as Australian interest rates are concerned. The key Official Cash Rate is seen staying at its record low of 1.5% this year and into 2018.
Moreover, the idea that the local consumer is struggling a little is not news. Survey evidence to this effect is mounting. Indeed, just this week the National Australia Bank’s business confidence survey found most sectors feeling chipper, bar the obviously consumer-focused retail area.
All that said of course the US central bank dominates proceedings. Interest rates are expected to rise another quarter percentage point following its June policy conclave. This will wrap up on Wednesday long after Asian markets close. An as-expected increase would further erode the Australian Dollar’s already slender yield advantage over its US cousin.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
