The Australian dollar is rebounding versus the US Dollar on Wednesday. The Aussie Dollar is snapping a two-day losing streak against its US counterpart as concerns over US fiscal stimulus overshadow weak Australian consumer confidence.
At 16:15 UTC, AUD/USD is trading +0.2% at US$0.6519. This is in the middle of the day’s trading range of US$0.6489 – US$0.6539.
Australian Dollar Advances Despite Weak Consumer Confidence
The Australian Dollar is putting its best foot forward despite dismal data. According to Westpac’s latest consumer confidence reading for March, household morale has plunged to a 5 year low of -3.8 on the index. This was well down from February’s +2.4 and significantly lower than analysts forecast of -0.4.
This is a strong sign of how the coronavirus outbreak is negatively impacting consumers. When morale declines, consumers often spend less. Therefore, economists will expect the sharp drop in consumer confidence to filter through into weaker consumption figures.
The Reserve Bank of Australia has already cut interest rates once last week. There is a growing expectation that they could cut rates again. Economists are forecasting that coronavirus will take 0.5% off growth through the first quarter of this year.
Investors will now look ahead to the release of consumer inflation expectations for March, due to be release later.
US Dollar Shrugs Off Upbeat Inflation
Demand for the US Dollar is softer on Wednesday as investors still await news of economic support from Donald Trump. President Trump announced the major economic support package on Monday; however, the White House has been silent ever since, unnerving investors.
The US stock markets are tumbling again on Wednesday with the S&P down 3% as coronavirus fears still dominate amid the lack of a coordinated response in the US.
US inflation data showed that consumer prices increased 2.4% year on year in February, this was ahead of the 2.2% forecast. Whilst, usually upbeat inflation data would lift the US Dollar. However, that hasn’t been the case today as the data doesn’t include the recent oil price drop or any impact from coronavirus.
There is no further US economic data due today. Instead investors will keep focused on the White House for any further signs of fiscal stimulus.
