Australian Dollar Gains, Westpac Consumer Confidence Pushes Higher
- Westpac consumer confidence indicator rose by 1.8% in January
- This was much less than December’s 3.6% gain
- However December had been a four-year peak, so any gains was impressive
The Australian Dollar rose modestly Wednesday after the release of yet more healthy consumer-related numbers out of its homeland.
The Westpac consumer confidence indicator for January rose by 1.8%. This was much less than December’s 3.6% surge but, all the same, represented more progress from that four-year high. Along with a very robust showing for November’s retail sales, hopes have been raised that the Australian consumer is at last showing up after a long period as the missing piece of the country’s economic jigsaw.
The jury remains out, however, as to whether increased confidence will mean the sustainably higher, inflation-boosting spending which regulators would like to see. The Aussie consumer still chafes under a huge debt load and high housing costs. Still, AUD/USD ticked up after the numbers.
The Australian Dollar remains in a very robust uptrend against the US Dollar on its daily chart, one which has endured since December 10. However, it is starting to look as though some pause for breath may be in order, even if it then pushes on. Momentum indicators show the pair rather overbought now. The Aussie has also now edged up into the area which in the recent past has prompted the Reserve Bank of Australia to worry publicly about the effects of excessive currency strength on its inflation-targeting mandate.
So far it has declined to do this year, but the markets have heard very little from it at all so far anyway. Its take on the currency when they do will be of great interest.
--- 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.