AU200 Analysis: Mixed Australian data bearish for AU200

By IFCMarkets

Mixed Australian data bearish for AU200

Australia’s economic data in the last couple of weeks were mixed: consumer confidence slipped in March and private sector contraction deepened. The Westpac Bank Consumer Confidence Index for Australia slipped to 91.9 in March from 95.5 in the previous month, when a decline to 94.7 was forecast. And the Commonwealth Bank Composite PMI for Australia fell to 40.7 in March from 49 in February, when a decline to 48.3 was expected. Readings below 50 indicate contraction while higher readings point to expansion. However the latest labor market report showed unemployment rate ticked down to 5.1% from 5.3% in February, partly due to slightly lower rate of labor force participation. Deteriorating data are bearish for AU200. Against the background of broadening impact of coronavirus on global economy, Australia’s central bank cut interest rates twice in two week period to a new record low of 0.25% aiming to cushion country’s economy against the impact of the coronavirus. At the same time Australia’s government launched an $11.4 billion stimulus package on March 12. The fiscal measures include payments to small businesses to encourage hiring, payment to people collecting government benefits such as old-age or veterans benefits, business subsidies in industries which have been hit hardest by the coronavirus (such as tourism). With many major governments embarking on fiscal and monetary stimulus programs to aid economies in weathering the downturn caused by coronavirus outbreak, investors confidence was boosted which was translated into a rebound in most stock markets. Recovering risk appetite is an upside risk for AU200.

Summary of technical analysis

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