The market sentiment deteriorated amid increasing virus cases in the USA and Australia. Investors prefer safe-haven assets like gold, the US dollar and the Japanese yen.
Dismal consumer mood in Australia might result in RBA rate cut soon
Australian customers have become pessimistic in a one-two punch to the Australian economy already facing an abrupt property downturn along with anemic wages surge, increasing the risk of an interest rate trim as soon as next month.
Decelerating global surge as well as a trade clash between China and America made Australia's key financial institution consider an easing.
That radical policy change by the country’s major bank was underscored by Wednesday’s poll that revealed that the Melbourne Institute and Westpac Bank index of customer sentiment headed south by 4.8% this month in contrast with February’s outcome of 4.3%.
Compiled from a poll of 1200 respondents, the index headed south by 4% from 2018. It means that optimists have been already outnumbered by pessimists.
It steeply contrasted with the cautiously optimistic customer mood in 2018.
The figures showed up a day after in February a closely-watched measure of Australian business conditions tumbled below the long-run average, suppressed by dives in sales and corporate profitability.
The business and consumer confidence polls actually confirm the weakening in Australia’s economy lately and hint at subdued conditions.
Notwithstanding the RBA's doggedly neutral stance, in the official cash rate by August domestic money markets are absolutely priced for a 25-basis point trim.
As a matter of fact, the Australian dollar inched down by about 0.4% ending up with $0.7049 as the consumer poll emboldened rate doves, making its way to a recent two-month dip of $0.7030.
One reason for the dismal sentiment in the report was a steep deceleration in the A$1.9 trillion economy in the second-half of 2018, in part because of the housing downturn.
The Reserve Bank of Australia will publish its statement and announce the interest rate on July 7, at 7:30 MT time.
The overall market sentiment was mixed after the USA recorded the largest increase in virus cases since May 9. The data even offset the better-than-expected NFP.
Riskier currencies and stocks are in favor of investors. Surprisingly, gold rallies too. Let’s have a closer look.
Congratulations! Gold has just opened a new era... or, rather, reopened...
Canada will publish the employment change and the unemployment rate on July 10, at 15:30 MT time.