Australian dollar edges lower, CPI next
The Australian dollar is slightly lower on Tuesday. AUD/USD is trading at 0.6638 in the North American session, down 0.27% on the day.
Australia’s Westpac Consumer Sentiment index flexed some muscle earlier on Tuesday but that didn’t help the Australian dollar. The index jumped 1.7% in June, a strong turnaround after three straight declines. Despite the improvement, consumer confidence remains deep in negative territory, at 83.6. The index has been mired below 100 for over two years as pessimistic continue to outnumber optimists by a wide margin.
Consumers have long been concerned that the Reserve Bank of Australia could raise interest rates, which at 4.35% are already at a 12-year high. The RBA remains concerned about sticky inflation and has warned that it could raise rates if inflationary pressures don’t ease. Inflation rose in April from 3.5% to 3.6% and May CPI, which will be released on Wednesday, is expected to rise to 3.8%.
If inflation did accelerate in May, it could set up another hold in rates and possibly a rate hike when the RBA meets in July. The RBA left interest rates at 4.35% at the June meeting for a seventh straight time and discussed the possibility of a rate hike at that meeting.
Inflation will be on center stage again on Thursday with the release of the Melbourne Institute Inflation Expectations, which is expected to rise to 4.3% in June, after a 4.1% gain in May.
In the US, Conference Board Consumer Confidence dipped to 100.4 in June, down from the revised 101.3 in May and just above the market estimate of 100.0, which separates pessimism from optimism.
AUD/USD is testing support at 0.6635. Below, there is support at 0.6591
0.6685 and 0.6729 are the next resistance lines
Australia’s Westpac Consumer Sentiment index flexed some muscle earlier on Tuesday but that didn’t help the Australian dollar. The index jumped 1.7% in June, a strong turnaround after three straight declines. Despite the improvement, consumer confidence remains deep in negative territory, at 83.6. The index has been mired below 100 for over two years as pessimistic continue to outnumber optimists by a wide margin.
Consumers have long been concerned that the Reserve Bank of Australia could raise interest rates, which at 4.35% are already at a 12-year high. The RBA remains concerned about sticky inflation and has warned that it could raise rates if inflationary pressures don’t ease. Inflation rose in April from 3.5% to 3.6% and May CPI, which will be released on Wednesday, is expected to rise to 3.8%.
If inflation did accelerate in May, it could set up another hold in rates and possibly a rate hike when the RBA meets in July. The RBA left interest rates at 4.35% at the June meeting for a seventh straight time and discussed the possibility of a rate hike at that meeting.
Inflation will be on center stage again on Thursday with the release of the Melbourne Institute Inflation Expectations, which is expected to rise to 4.3% in June, after a 4.1% gain in May.
In the US, Conference Board Consumer Confidence dipped to 100.4 in June, down from the revised 101.3 in May and just above the market estimate of 100.0, which separates pessimism from optimism.
AUD/USD is testing support at 0.6635. Below, there is support at 0.6591
0.6685 and 0.6729 are the next resistance lines
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