The Australian dollar demonstrated good performance today as news from Australia was good, providing support to the currency. Judging by the gains of commodity currencies and lack of demand for safer ones, the market sentiment was relatively optimistic, which is surprising considering that recent news from around the world gave no reason for optimism.
The Westpac-Melbourne Institute Index of Consumer Sentiment rose 1.9% in March following the 4.8% drop registered in February. The report explained the good result by positive reaction of consumers to the Federal Budget:
The survey was conducted over the period April 1 to 5 and captures consumer reactions to the Federal Budget. While the month to month rise in sentiment is fairly muted, the survey detail suggests the Budget was well-received. Sentiment over the course of the week showed a clear boost, with sentiment amongst those surveyed post-Budget 7.7% higher than sentiment amongst those surveyed prebudget â the most positive turnaround since we began tracking pre and post Budget responses in 2011.
Market analysts also explained the Aussie’s strength by the fact that the speech of Guy Debelle, Reserve Bank of Australia Deputy Governor, showed no additional signs of dovishness on part of Australian policy makers, suggesting that they will watch for additional macroeconomic data before making a decision regarding monetary policy changes. Debelle noted that macroeconomic indicators were contradicting each other, providing no clear picture of Australia’s economic health:
The two lenses on economic growth provided by the labour market and the GDP data are in stark contrast. A third lens, in the form of business surveys, sits in between the two.
AUD/USD gained from 0.7125 to 0.7148 as of 11:47 GMT today, bouncing from the daily low of 0.7109. EUR/AUD declined from 1.5804 to 1.5775. AUD/JPY edged up from 79.19 to 79.47.
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