Australian Dollar Rises Despite Deteriorating Consumer Sentiment —

The Australian dollar rose today even though macroeconomic data showed that the consumer sentiment was deteriorating. In fact, the Aussie was the strongest currency on the Forex market intraday but the Canadian dollar outperformed its Australian counterpart by the time of writing.

The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 4.5% in January from December after rising by 4.1% in the previous month. It was the first drop since August, though it was nowhere near as big as the August decline. Unsurprisingly, the report attributed the drop to “domestic border closures, the emergence of Covid clusters in some states, and the sharp upswing in Covid cases overseas, notably the US and the UK”. Despite the decline, the indicator stood at 107, firmly above the neutral 100 level. That means that the number of optimists was still far bigger than the number of pessimists. The report said that the indicator “still points to healthy Consumer Sentiment”. As for the interest rate outlook, the report stated:

The Reserve Bank Board next meets on February 2. This meeting will be the first since December 1 last year. However, the Board seems almost certain to maintain its current policy stance.

Released later during the trading session, the Conference Board Leading Economic Index for Australia increased by 0.8% in November, the same as in the prior month. The Conference Board Coincident Economic Index for Australia also rose by 0.8%.

AUD/USD rose from 0.7695 to 0.7740 as of 16:37 GMT today. EUR/AUD dropped from 1.5755 to 1.5638. AUD/CAD was up from 0.9793 to 0.9828 intraday but has retreated to 0.9785 by the time of writing.

If you have any questions, comments, or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.