Australia's consumer confidence index fell in January, largely due to the spread of the Omicron variant which weighed on the economic outlook and near-term financial conditions.
On Wednesday (19/January), Westpac Banking Corp. released data on Australian Consumer Confidence which fell 2 percent from 104.3 to 102.2 in January. The dimming of consumer optimism this time is related to the emergence of the Omicron variant of the COVID-19 which has more or less raised concerns about the potential for a lockdown.
The spread of the Omicron variant is actually not as severe as the Delta wave in 2021. At that time, the Australian sentiment index fell to 5.2 percent. The index also slumped more sharply by 17.7 percent when the first wave of COVID appeared in early 2020.
In the release of survey results earlier this year, consumers acknowledged that their financial condition had improved compared to last year, as reflected in the family finance sub-index which rose from 89.0 to 95.6. However, the emergence of Omicron seems to have clouded the financial outlook going forward, as seen from the decline in the family finance sub-index for the next 12 months which fell from 111.2 to 108.1.
Meanwhile, the sub-index of economic conditions for the next 12 months decreased 9.6 percent from 104.9 to 94.8. The sub-index of economic conditions for the next 5 years also fell 6.1 percent from 110.4 to 103.6.
Consumer confidence increased 1.7 percent in New South Wales, and rose 4.1 percent in Victoria. Meanwhile, the regions that recorded a decline in consumer confidence were Western Australia (-5.1 percent), South Australia (-3.9 percent), and Queensland (-2.7 percent).
Overall, the emergence of the Omicron variant that entered Australia since November last year has clouded the economic and financial prospects of consumers. However, the impact is not as bad as the Delta variant because so far there have not been many casualties due to Omicron.
AUD/USD trying to strengthen
Australia's declining consumer confidence data does not have a high impact on the movement of the Australian Dollar. The AUD/USD pair is currently trading at around 0.7192 or up 0.13 percent from the daily open price. Technically, the Australian Dollar is still in the range of price declines that have been formed in the last 4 trading days.
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