The Australian dollar was firm today despite poor macroeconomic data, both domestic and in China, Australia’s biggest trading partner. The possible reason for the rally was profit-taking after yesterday’s huge slump. The currency fell against some rivals intraday but has erased losses against all of them by now.
The Westpac-Melbourne Institute Index of Consumer Sentiment dropped 4.1% in July after declining 0.6% in June. The report said it was troubling development as there were plenty of factors that should have supported the confidence of consumers:
The fall in sentiment this month is troubling as it comes against what should have been a supportive backdrop for confidence. The last month has seen a further 25bp interest rate cut from the RBA, the Federal governmentâs tax package pass through Parliament, more signs that the Sydney and Melbourne housing markets are stabilising and even some more improvement in the US-China trade dispute. Despite these positives, Australian consumer confidence has fallen to a two year low.
The main driver continues to be deepening concerns about the outlook for the Australian economy and prospects for family finances.
Meanwhile, the National Bureau of Statistics of China reported that the Consumer Price Index rose 2.7% in June, year-on-year, the same as in May and matching expectations. But the Producer Price Index was unchanged after rising 0.6% in the previous month, while experts had predicted an increase by 0.3%. Furthermore, the PPI dropped 0.3% month-on-month.
AUD/USD gained from 0.6926 to 0.6954 as of 14:18 GMT today, rebounding from the daily low of 0.6910. EUR/AUD traded at 1.6166 after rallying from 1.6174 to 1.6231. AUD/JPY edged up from 75.39 to 75.58.
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