(MENAFN- DailyFX) Talking Points
Australian confidence rose to four-year highs in December The got a modest boost, with the market quite Fed-focused However if consumer confidence has bottomed this series could be interesting in 2018 Just getting started in trading? The DailyFX is all yours.
The Australian Dollar markets is like all others awaiting the US Federal Reserve's final monetary policy call of 2017 Tuesday, and some bullish domestic economic news made little impact as a result.
December's consumer confidence index from Westpac rose 3.6% to hit its highest level in four years. November had seen the index retreat by 1.7%. The lender called the result ‘surprisingly strong' and suggested that consumer confidence may have bottomed out in the third quarter.
Australian consumers remain saddled with very high debt, serviced via stagnant wages so it remains to be seen whether this increased confidence will result in higher spending. All the same, strong job creation and rising consumer confidence are trends which if continue may cast doubt on the rather distant current pricing of a rate hike. Currently no rise in the record-low, 1.50% Official Cash Rate is expected until well into 2019.
Such concerns are not for this week in the AUD/USD market, however. The pair failed to rise much on the release although it did make some headway.
On its daily chart AUD/USD remains mired by the downtrend which has been in place since the pair topped out for the year so far back in early September. The Aussie's weakness is rooted in adverse interest-rate differentials between its home nation and the US likely to be underlined later by the Fed. The notion that the Reserve Bank of Australia as more compatible with its growth and inflation goals hasn't helped Aussie bulls either.
The currency does appear to be settling into something of a range, with its base around last week's lows. However, that may simply be a function of the market settling back to wait for the Fed. A downtrend break still seems unlikely.
--- Written by David Cottle, DailyFX Research
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