Aussie ignores soft confidence data

The Australian dollar is in positive territory in the Wednesday session. AUD/USD is currently trading at 0.7730, up 0.45% on the day.

Consumer Confidence plunges

Australia released Westpac Consumer Confidence earlier in the day, and the numbers were dismal. Consumer confidence fell by 4.5% in January, its first decline since August, when the index recorded back-to-back declines. Unsurprisingly, the report attributed the sharp drop in consumer sentiment to Covid-related factors; namely, Covid outbreaks and border closures. Even with the drop, consumer confidence is comfortably perched at 107.0. This is well above the neutral 100-level, and indicates that consumers remain optimistic about the economy. This could explain why investors didn’t panic over the reading, and the Australian dollar has posted gains on Wednesday despite this poor performance.

Meanwhile, the US dollar remains under pressure, as Janet Yellen’s testimony at her confirmation hearing for Treasury Secretary touched on the Biden administration’s plans to implement additional stimulus to the tune of USD 1.9 trillion. Risk sentiment has moved higher on expectations of a massive fiscal stimulus package. Equity markets reacted positively to Yellen’s testimony, but this move came at the expense of the US dollar, as the major currencies rallied overnight against the greenback.

Thursday brings a host of Australian data, so we could see AUD/USD continue to show movement. The Melbourne Institute will release Inflation Expectations, which has been steady at 3.5 per cent over the past two months. This will be followed by key job data. Employment Change is expected in at a modest gain of 50 thousand, while the unemployment rate is expected to drop from 6.8% to 6.7%. Finally we’ll get a look at the services and manufacturing PMIs.

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AUD/USD Technical

• With AUD/USD moving higher, the next resistance line is at 0.7768.  Above, there is support at 0.7618
• There is support at 0.7645,, followed by support at 0.7586
• AUD/USD crossed above the 20-day MA line earlier in the day, which is a bullish technical signal

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