Forex - AUD weaker on consumer sentiment drop, USD steady vs majors

A A A - The Australian dollar weakened mildly on Wednesday after a bank survey showed consumer sentiment fell in December to the lowest level since July, raising the prospects for a cash rate cut by the Reserve Bank of Australia when its board next meets in February.

AUD/USD traded at 0.9146, down 0.05%. after a survey by Westpac-Melbourne Institute showed consumer sentiment dropped 4.8% to 105.0 in December along with long-term outlooks for the economy.

"Westpac has maintained a forecast for another rate cut of 25bps at (the) February meeting for some time," said Westpac chief economist Bill Evans.

"It may be that the interaction of forces which we envisage takes longer to become apparent to the Board and the rate cut decision is delayed for some months. Of particular concern here is whether the housing data over the next few months is sufficiently reliable. For now, we retain our call for a cut in February while fully recognizing that a delay to that move is also a realistic outcome."

Overnight, renewed uncertainty as to whether or not the U.S. central bank will wait until early 2014 after reviewing more data before deciding on tapering softened the greenback.

Major currencies in Asia were lightly traded with USD/JPY at 102.83, down 0.02%, following October core machinery orders data that met expectations of a 0.6% increase.

The euro overnight saw continued support on a surprise European Central Bank decision to hold off on implementing fresh monetary stimulus measures at its December meeting, including introducing negative interest rates, after surprising investors with a rate cut in November.

EUR/USD traded at 1.3764, up 0.03%.

In a speech on Tuesday, ECB President Mario Draghi urged governments to complete a banking union, saying it was crucial at both a national and European level.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.01% at 79.98. offers an extensive set of professional tools for the financial markets.
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This article appears in: Investing , Forex and Currencies

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