Investing.com - The Australian dollar strengthened against its U.S. counterpart during Wednesday’s Asian following an encouraging dose of consumer sentiment data.
In Asian trading Wednesday, AUD/USD rose 0.34% to 1.0345, rebounding from multi-month lows seen during Tuesday’s trade. The pair was likely to find support at 1.0249, the low of February 12 and Wednesday’s action took the Aussie through resistance at 1.0258.
A report released earlier today by Westpac and the Melbourne Institute said Australian consumer sentiment rose by 7.7% last month to 108.3 points, the best level since December 2010. On an annualized basis, the increase was 7.2%.
Westpac cited a series of interest rate cuts as adding to the ebullient consumer tone. The Reserve Bank of Australia has cut the country’s benchmark overnight cash rate by 175 basis points since late 2011. Australian interest rates currently stand at 3% and although RBA did not cut again at its meeting earlier this month, markets seem to be pricing in another rate cut at some point this year.
Analysts and traders see the specter of another RBA rate cut as providing additional headwinds to the Aussie dollar. Some traders believe RBA could cut rates by as much as 50 basis points this year. Even a reduction of 25 basis points to 2.75% would take Australian interest rates to a record low.
On Tuesday, National Australia Bank said that its index of business confidence improved to 3 in January from a reading of 2 the previous month.
Traders will now turn their attention to the Bank of Japan meeting that commences on Thursday and the confab of G20 central bankers and finance ministers in Moscow that starts on Friday and goes through Saturday.
Elsewhere, AUD/JPY fell 0.04% to 96.33 while EUR/AUD shed 0.32% to 1.3011. AUD/NZD added 0.23% to 1.2292.
In Asian trading Wednesday, AUD/USD rose 0.34% to 1.0345, rebounding from multi-month lows seen during Tuesday’s trade. The pair was likely to find support at 1.0249, the low of February 12 and Wednesday’s action took the Aussie through resistance at 1.0258.
A report released earlier today by Westpac and the Melbourne Institute said Australian consumer sentiment rose by 7.7% last month to 108.3 points, the best level since December 2010. On an annualized basis, the increase was 7.2%.
Westpac cited a series of interest rate cuts as adding to the ebullient consumer tone. The Reserve Bank of Australia has cut the country’s benchmark overnight cash rate by 175 basis points since late 2011. Australian interest rates currently stand at 3% and although RBA did not cut again at its meeting earlier this month, markets seem to be pricing in another rate cut at some point this year.
Analysts and traders see the specter of another RBA rate cut as providing additional headwinds to the Aussie dollar. Some traders believe RBA could cut rates by as much as 50 basis points this year. Even a reduction of 25 basis points to 2.75% would take Australian interest rates to a record low.
On Tuesday, National Australia Bank said that its index of business confidence improved to 3 in January from a reading of 2 the previous month.
Traders will now turn their attention to the Bank of Japan meeting that commences on Thursday and the confab of G20 central bankers and finance ministers in Moscow that starts on Friday and goes through Saturday.
Elsewhere, AUD/JPY fell 0.04% to 96.33 while EUR/AUD shed 0.32% to 1.3011. AUD/NZD added 0.23% to 1.2292.