- AUD is on the defensive, courtesy of weak domestic data.
- Australia’s consumer confidence has hit two-year lows.
- RBA’s rate cuts and Government’s tax cuts have failed to boost sentiment.
The Aussie Dollar is flashing green this Wednesday morning and appears on track to test the support at 0.6914, which is the 61.8% Fibonacci retracement of the rally from 0.6832 to 0.7048.
The Westpac-Melbourne Institute Index of Australian Consumer Sentiment fell 4.1% to 96.5 in July from 100.7 in June. The consumer confidence has dipped despite interest rate cuts and tax relief.
The Reserve Bank of Australia cut rates by 25 basis point to a new record low of 1.00% earlier this month. Further, the Australian government announced tax cuts last week in a bid to support the ailing economy.
Even so, Australia’s consumer confidence has dipped to two-year lows – a sign the investors have taken the recent rate cuts and tax cuts as a confirmation of deteriorating economic conditions.
Therefore, the path of least resistance for the AUD is to the downside. As of writing, the AUD/USD pair is trading at 0.6925. The Australian currency may pick up a bid if China’s producer price index, due at 01:30 GMT, beats estimates.
Pivot points
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