- Australian consumer confidence declines, business confidence steady
- Fed member Harker says Fed may be done raising rates
The Australian dollar has bounced back on Wednesday and is trading at 0.6552, up 0.13%. AUD/USD slipped 0.45% on Tuesday and dropped to its lowest level since June 1st.
Australian consumer confidence slips, business mood stays steady
Australia’s consumers remain deeply pessimistic about economic conditions. The Westpac consumer sentiment index declined in August by 0.4% to 81 points, well below the 100 level which divides optimists and pessimists. In July, the index rose 2.7%. Consumer sentiment fell despite the Reserve Bank of Australia’s decision in July to hold rates steady for a second straight month. The RBA has raised rates by some 400 basis points in the current cycle and high borrowing costs continue to dampen consumer sentiment.
Business confidence also remains low, but the situation is somewhat better. The National Bank Business Confidence (NAB) index for July improved to 2, up from a downwardly revised -1 in June. This was the highest level since January. The zero level divides optimists from pessimists. Business conditions eased slightly to 10, indicating that businesses continue to show resilience to higher borrowing costs. The strength of the business sector is an encouraging sign that the economy could avoid a hard landing despite the RBA’s aggressive tightening cycle.
Fed’s Harker eyes rate cuts in 2024
Fed member Harker said on Tuesday that the Fed might be done raising rates, “absent any alarming new data”. Harker said that rates would need to stay at the current high levels “for a while” and went as far as saying that the Fed would likely cut rates at some point in 2024. Harker was careful not to express an opinion about the September decision, but the Fed rate hike odds are just 14%, according to the FedWatch tool. The Fed raised rates in July, and Fed Chair Powell has signalled that he would raise rates one more time a stance that is clearly more hawkish than that of the markets.
AUD/USD Technical
- There is resistance at 0.6607 and 0.6700
- 0.6475 and 0.6382 are providing support
