After a relatively flat start to the week for the Australian Dollar, Wednesday provided some strength for the AUD; with 0.29% improvement during the day in the AUDEUR; 0.27% improvement in the AUDUSD and 0.18% in the AUDGBP.
Westpac Consumer Confidence was released yesterday with a figure or 98.5, which is an improvement on last month’s 94.9. This is a positive improvement for the economy however still below the 100 mark, which indicates that the majority still have a pessimistic view about the state of the economy.
Commonwealth Bank Senior economist John Peters said that “weakness in the jobs market was a key factor in continuing to dampen consumer confidence”. The unemployment data released for Australia last week came out with a 12 year low of 6.4% and this will have flow through effects to consumer confidence as job security is closely correlated with consumer confidence.
AUD Wage cost index was also released and was at a record low of 0.6%, this is not altogether surprising given the high unemployment rate for this period, but didn’t seem to dampen the positive sentiments of the day as the AUD continued its slow climb to recovery.
The Australian Dollar increased marginally all day and had a further rally after 3:00pm AEST with the release of the Chinese Industrial data. The result was an increase of 9.0% year on year for July. Whilst this is a marginal slow down on the previous result which was an increase of 9.2%, investors didn’t appear to react to this data, with a temporary drop against the majors the Australian Dollar continued its rally.
Overnight the UK released the Bank of England (BoE) Quarterly Inflation Report, the dovish statements by Governor Mark Carney had an instant reaction on the GBP. The key points of his speech were that the BoE have substantially reduced their wage growth forecast from its previous forecast of 2.5% down to 1.25%. The speech indicated that the interest rate rise is less likely within the near future. The AUDGBP is sitting at 0.5572 at 8:30am AEST this morning.
USD Advanced Retail Sales data was also released overnight, a market mover given that consumer spending is a timely indication of consumer demand and confidence. The result was lower than both the forecast and the previous month with a flat result of 0.0%. The AUD made further advances against the USD with this data out and is currently sitting at 0.9303 US cents.