The Australian dollar dropped today as Australian’s consumer sentiment sank this month, hurt by the announcement of the Federal Budget that showed spending cuts and a new tax.
The Westpac Melbourne Institute Index of Consumer Sentiment sank by 6.8 percent in May from the previous month. Bill Evans, Westpac’s Chief Economist, commented:
The sharp fall in the Index is clearly indicating an unfavourable response to the recent Federal Budget. This puts the Index at its lowest level since August 2011, before the Reserve Bank began its recent rate cut cycle.
At the same time, he mentioned that “the Budget will assist the economy over the medium term”. The Aussie reacted negatively to the report, falling for the third consecutive session.
AUD/USD dropped from 0.9242 to 0.9221, and AUD/JPY fell from 93.63 to 93.39 as of 12:50 GMT today, touching the low of 93.03 intraday.
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