Forex News: AUD/USD: Australian consumer sentiment slips into pessimistic terrain

on Mar 12, 2014
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_iNVEZZ.com: Wednesday, March 12th:_ The Westpac Banking Corporation and the Melbourne Institute jointly reported at 23:30 UTC yesterday that their Consumer Sentiment Index had fallen 0.7 percent this month to a reading of 99.5 points from 100.2 in February.

A reading below 100 means that pessimistic responses have exceeded those of optimists. The latest print is the fourth straight drop and the lowest since May of last year.
“The initial declines in December-January looked to be mainly the unwinding of the election-related sentiment boost,” Westpac senior economist Matthew Hassan writes in a commentary on the latest number. “More recent falls though have had a very clear theme centring on a sharp loss of confidence in the economic outlook and escalating job-loss fears.”

In Westpac’s view, “the run of ‘bad news’ around the motor vehicle industry, other manufacturers and Qantas has clearly rattled consumers”.
The sub-index measuring consumer outlook on economic conditions over the next 12 months dropped four percent to its lowest point since December 2011.
Westpac notes that the degree of concern over jobs was “very high”, with the index of unemployment expectations rising 5.5 percent, reflecting a growing number of consumers who project unemployment to rise in the next 12 months.

“The index is at an extreme high only eclipsed by readings during 2008-09 and the recessions in the early 1990s and early 1980s.”
The sub-index based on the survey question whether now is a good time to buy a home dropped 6.7 percent, falling below its long-run average for the first time since last August.
Westpac’s Hassan: “This likely reflects deteriorating affordability due to higher prices and a shift in expectations for interest rates.”

Home Loans m/m didn’t change in January from December, the Australian Bureau of Statistics reported today. Analysts had been expecting a 0.5 percent lift.
The number of home loans issued in the month stood at a seasonally adjusted 51,054 but the total value contracted 0.4 percent to A$26.86 billion.
National Australia Bank senior economist Spiros Papadopoulos believes little should be read into this one set of data.

“We have seen a strong upward trend over the past year and given low interest rates will be around for most of this year, we expect these series to bounce back in coming months,” he writes.
In trading so far today, the AUD/USD has extended yesterday’s loss of 0.57 percent in hitting its lowest level since 5 March at 0.8946. Currently the pair is at 0.8957 and testing both the ascending trendline in formation since 24 January and the 89-day simple moving average, at 0.8943 right now.
Resistances today: 0.9015, 0.9035 and 0.9060.
Supports: 0.8925, 0.8900 and 0.8880.

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