AUSTRALIA DATA: Sentiment Improving Towards Neutral As Real Incomes Rise
Westpac’s consumer confidence is trending towards the breakeven 100-level. Sentiment rose 5.7% m/m to 98.5 in August, the highest since February 2022, before the last tightening cycle began. The RBA’s third rate cut this year on August 12 helped to boost confidence but the improvement was not just seen amongst mortgage holders. Governor Bullock also pointed out that further easing is consistent with inflation at the target mid-point.
Australia Westpac consumer confidence
Source: MNI - Market News/LSEG
- Westpac notes that with unemployment low and inflation in the band and signs the consumer is recovering, the RBA can remain cautious. It expects rates on hold in September with a cut in November.
- Deputy Governor Hauser noted in July that disappointing consumption growth may have been impacted by a “scarring effect” as sentiment had remained depressed. This data suggests that may have dissipated.
- The improvement was broad based across components with a particularly strong rise in the assessment of family finances with compared to a year ago +6.2% to 84.2 and expected in a year +5.4% to 106.8, positive territory. Lower inflation & rates as well as wage rises & tax cuts appear to be helping.
- In terms of mortgage rate expectations for the next year, just over 50% of those surveyed post the August RBA decision expect them to be lower.
- The “time to buy a major item” increased 4.2% to 101.7, also suggesting recovering purchasing power, but it remains below the historical average.
- Unemployment expectations improved 2.4% in August, the lowest since May. Westpac observes that it is signalling a “stable labour market”.
- “Time to buy a dwelling” rose 10.5% m/m and 37% y/y, but is still below average. Prices though rose 0.9% to 164.2, close to the series high.
Australia Westpac "time to buy a major item"
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JGB TECHS: (U5) Returns Toward Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 138.08 @ 16:31 GMT Jul 18
- SUP 1: 137.70 - Low Jul 16
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs hold above recent lows, however a bearish theme remains intact following the reversal posted off the mid-June highs. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, the first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
CANADA: July BOC Cut Pricing: From Distinct Possibility To Negligible This Week
The implied probability of a July BOC rate cut has gone from a distinct possibility to negligible this week, following Tuesday's firmer-than-expected core inflation data.
- The accompanying chart shows implied pricing (in percentage points) for July's BOC decision - it dropped from around 30% implied (7+bp) prior to the labour market report last Friday, to under 20% going into CPI (4+bp), reducing after that to under 10% (<2bp).
- For the year as a whole, markets have priced out about 15bp of cuts through those two data points - now seeing about 15bp of easing through December. As such, it's very much in question whether the BOC's easing cycle is already at an end.
- Apart from the ongoing US-Canada trade negotiations, next week's scheduled highlight will be the BOC's Business Outlook Survey out Monday, followed by May Retail Sales out Thursday which will be the final major input into the macro puzzle for the BOC going into its decision on July 30.
| Meeting | Current | Last week's close (Jul 09) | Change since then | Cumulative Change From Current Rate (bp) |
| Jul 30 2025 | 2.74 | 2.68 | 5.6 | -1.9 |
| Sep 17 2025 | 2.69 | 2.60 | 9.3 | -6.0 |
| Oct 29 2025 | 2.65 | 2.53 | 12.1 | -10.5 |
| Dec 10 2025 | 2.61 | 2.45 | 15.7 | -14.6 |
USDCAD TECHS: Has Pierced The 50-Day EMA
- RES 4: 1.3920 High May 21
- RES 3: 1.3862 High May 29
- RES 2: 1.3798 High Jun 23
- RES 1: 1.3747/74 50-day EMA / High Jul 17
- PRICE: 1.3715 @ 16:56 BST Jul 18
- SUP 1: 1.3639/3557 Low Jul 08 / 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD is trading closer to its recent highs. Attention is on resistance at 1.3747, the 50-day EMA. It has been pierced. A clear break of it is required to highlight a possible stronger short-term reversal. This would open 1.3798, the Jun 23 high. For now, a bear trend remains firmly in place. A resumption of weakness would refocus attention on key support at 1.3540, the Jun 16 low. Clearance of this level would confirm a resumption of the downtrend.
