Australian dollar smashed on sagging consumer confidence

by Chris Becker

Yesterday’s NAB Business Survey put the Australian dollar under pressure, but it wasn’t until overnight markets reacted to the poor print coupled with their unease surrounding the upcoming Powell testimony that saw support disappear for the Pacific Peso which crashed to a two week low:

 

And now its ripe to fall again as the Westpac Consumer Confidence print takes a big nose dive, with the latest survey encompassing so much “good news” since the previous print, it should have been a clear increase. For the record, there’s been another RBA rate cut (and all but CBA’s mortgage rate cuts)ScoMos tax bribes, easing in lending standards for more housing speculation and a possible reversal in the housing market itself.

But no, the index fell to 96.5 from 100.7 points with -4.1% for the month. The Aussie dollar is off already and looks set to break below 69 cents vs USD:

More bad news tonight if Powell doesn’t go dovish.

 

Comments

    • Oh the first one did. But i know of a few people that went “uh oh” with the second one. RBA now has them spooked.
      See when you see a rabbit running past you in a forest you dont tend to think much of it. But then when it is followed by a wolf and the wolf doesn’t stop for you either, you have to now wonder what is chasing the wolf for the wolf to be running scared. A bear for sure.

    • Not really, there is a point where lowering rates cause people to conclude that everything is screwed and the authorities have no idea what they’re doing. We’ve passed this point and each rate cut will just be a further admission of failure.

      • St JacquesMEMBER

        Exactly. Probably now doing more harm, especially when you take into account those self funded retirees now eating dog food and spuds.

  1. I desperately need a short term (2-4w) crystal ball for AUD vs GBP forex movements. Anyone have any opinions?

    All the AUD news seems bad, but the Brexit thing is becoming an issue again as the clock counts down and the tory leadership contest gets ever more extreme.

    • Couldn’t possibly. Absolute roll of the dice David. You are right that unpredictable news could shift it in either direction – probably repeatedly!

      If you need to move a large volume of money and you are nervous about timing, one method is to move it in three or four chunks a week apart. That way you kind of smooth out the volatility and get the average price over the month. The point is to minimise regret (not maximise gains).

      If you are a gambler on the other hand – I dunno – pick a rate you want and put in a limit order…. good luck…

    • I think it was Benjamin Graham who said in the short term the market is a counting machine, but in the long term it was a weighing machine.

      Can’t help you short term – anything could happen, but long term there’s no question the AUS$ will take a pounding when the global debt bubble vaporises the insanely vast amount of bullshit valuations out there and takes the Chinese export and apartment machines with it

  2. with IO, Coal and even Gas at current prices it is hard to push the AUD very low. So yeah, Josh will have his surplus while the economy will go into recession with job loses probably already started and will show in July data due to come out in Aug.
    But hey BHP, Rio and couple of others will be happy with all profits stashed in Cayman.

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