- The Australian Dollar was already weaker following comments from Reserve Bank of Australia Deputy Governor Christopher Kent
- News of weaker consumer confidence didn’t help
- Westpac’s indicator showed a significant August drop-off
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An already-pressured Australian Dollar slipped further on Wednesday on news of weaker domestic consumer confidence.
August’s index from major lender Westpac came in at 95.5. That was well below July’s 96.6. The on-month decline of 1.2% was much worse than the 0.4% rise seen previously. Admittedly this monthly survey seems somewhat at odds with other looks at sentiment which have been more encouraging but, all the same, this big slip will keep investors closely focused on Australian consumption. This is also the ninth straight month in which the pessimists have outnumbered those more cheerful in Westpac’s snapshot.
Earlier the Australian Dollar had slipped following a speech from Reserve Bank of Australia Assistant Governor with responsibility for financial markets Christopher Kent. There was little for the market in his speech but answering questions later he said that a further rise in the currency would mean slightly lower domestic growth.
The RBA seldom loses a chance to worry about the effects of a higher currency on the domestic economy. However, it usually does so in the context of Australia’s transition away from reliance on its vast raw material sector. Mr. Kent’s explicit focus on general growth was a new development and markets will be on watch to see whether this is repeated by other RBA officials in the days and weeks to come.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX