Australian dollar loses ground despite solid confidence indicators

  • Australia’s consumers and business confidence improve
  • US inflation expected to fall to 3.1%

The Australian dollar is in negative territory on Tuesday. AUD/USD is trading at 0.6656 in the North American session, down 0.28%.

Consumer and business confidence rise 

Australia released business and confidence data on Tuesday, with both showing improvement. Westpac Consumer Confidence rose to 81.3 in June, up from 79.2 in May, a gain of 2.7%. As well, NAB Business Confidence climbed to zero in May, up from -3 a month earlier. Confidence levels for consumers and businesses are still weak, but the improvement is welcome news. The stronger numbers may have been aided by the Reserve Bank of Australia’s decision to pause rates last week, which provided some relief to households and businesses.

RBA Governor Lowe will be in the spotlight on Wednesday when he delivers a speech about monetary policy. Investors will be looking for some clues about future rate policy. Inflation fell in May to 5.6%, but that is still way off the Bank’s target of 2%.

The money markets were split ahead of the July decision on whether the RBA would raise rates or pause, and it’s uncertain what the central bank will do at the next meeting on August 1st. The money markets have priced a pause at 59% and 25-bp hike at 41%, according to the ASX RBA rate tracker.

Over in the US, there’s little doubt about the Federal Reserve plans, at least for the July 26th meeting. The money markets have priced in a July rate hike at 92%, according to the CME FedWatch Tool. What happens after that? The answer could depend a lot on the June inflation report which will be released on Wednesday. Inflation is expected to fall from 4.0% to 3.1%, and core CPI is expected to drop from 5.3% to 5.0%.

If core CPI surprises and accelerates, I would expect that to increase the likelihood of a September rate hike. Three Fed officials spoke on Monday, and the message was that rate hikes have pushed inflation lower but the job is not done yet and more rate hikes are still necessary.


AUD/USD Technical

  • AUD/USD is testing support at 0.6666. This is followed by support at 0.6623
  • 0.6732 and 0.6838 are the next resistance lines

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)