A measure of Australian consumer sentiment dived in June to entirely reverse the previous month's promising increase, a blow to hopes for a much-needed upturn in household spending. The survey of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment slid a seasonally adjusted 6.9% in June.The index reading of 95.3 was 2.3% higher than in June 2014, but the weakest since the start of this year.
The drop wiped out May's 6.4% increase which had followed a cut in interest rates
to record lows and a government budget that included a surprise tax break for small businesses. "This is a surprisingly weak result. It now appears that last month's surge of optimism was a brief 'relief rally',
" said Bill Evans, Westpac's chief economist.
Evans cited several possible reasons for the pullback including falls in the share market; uncertainty in Europe; more signs of soft conditions in labour markets and nervousness about the outlook for house prices. The Reserve Bank of Australia (RBA) will likely also be disappointed that its latest rate cut to 2 percent did not have a longer-lasting impact on the consumer mood.
Data did not have any major impact on the markets with Aussie currently being traded slightly below 0.77 handle. Pair is likely to find support around 0.7650 area and resistance between 0.7720 and 0.7750 level. There will be no major data releases in the rest of the session.