AUD/USD Rides Westpac Consumer Miss, Downtrend Threatened
Australian consumer confidence fell this month, according to Westpac
However its index on the subject remains above the key 100 level, where optimism still rules
The Australian Dollar market was clearly focused elsewhere
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The already elevated Australian Dollar didn’t move much on news that consumer confidence slipped a little in its home nation this month.
April’s index from major domestic lender Westpac fell 0.6% to 102.4, from the 103.0 seen in March. For glass-half-full types its notable that the index remains above the crucial 100 barrier, which is where optimists outnumber pessimists. However, that point is obviously getting rather close.
The Australian Dollar market didn’t pay much immediate attention. It is looking outward at the moment, benefitting in full from the general revival in risk appetite which came following more emollient words on trade from China’s President Xi on Tuesday.
Economists don’t generally publish forecasts for this survey but reports before the fact suggested that it was thought likely to fall back on a combination of house price softness, market volatility and weak wage growth.
There will probably be very little pass-through to Australian interest rate expectations. The Official Cash Rate’s 1.50% record low is expected to endure until well into 2019 in any case.
On its broader daily chart AUD/USD is once again testing the upside of the dominant downtrend channel which has held sway since late January. A durable upside break would be a notable victory for the bulls, although they may still have a job on their hands to consolidate above the downtrend and push higher given the Aussie’s rather feeble interest-rate differential position.
Keep a closed eye on this nascent uptrend as Wednesday seems to be developing onto a rather crucial day. Another close below the channel top could mean that another attempt to break higher has failed. That would in turn put market focus on the 0.7726 region, where the index peaked last week, and on the 0.7639 point which at the moment seems to offer the currency pair quite strong support.
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--- Written by David Cottle, DailyFX Research
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