The Australian dollar is showing little movement on Tuesday. In the European session, AUD/USD is trading at 0.6174, down 0.06% at the time of writing.
Australian consumer sentiment declines for second straight month
The Australian consumer remains pessimistic about the economic outlook. The Westpac consumer sentiment index fell 0.7% in January from -2% in December 2024. This brought the index down to 92.1 in January, down from 92.8 a month earlier.
The Westpac report found that confidence over employment has been falling and interestingly, a majority of consumers expect interest rates to move higher, despite signals that the Reserve Bank of Australia’s first rate move will be a cut rather than a hike. The RBA hasn’t moved on rates in over a year and the current cash rate of 4.25% continues to squeeze businesses and consumers. Australia releases third-quarter inflation on Jan. 29 and the central bank will be watching. That inflation reading could result in a historic rate cut if inflation is lower than expected.
We’ll get a look at the US Producer Price Index later today, with mixed numbers expected. PPI is projected to jump from 3.0% to 3.4% y/y while decreasing monthly from 0.4% to 0.3%. Core PPI and is expected to jump to 3.8% y/y from 3.4% and from 0.2% to 03% m/m. If the PPI report indicates an acceleration as is expected, the money markets will likely lower their expectations for a rate cut. Currently, the money markets have priced in a quarter-point cut at the Jan. 29 meeting at below 3% and at the March meeting at around 20%. Federal Reserve members are sounding hawkish and have signaled that the market shouldn’t expect a rate cut anytime soon.
AUD/USD Technical
- AUD/USD tested resistance at 0.6193 earlier. Above, there is resistance at 0.6209
- 0.6162 and 0.6146 are providing support
