AUD Rebounds as Consumer Sentiment Surges, But Underlying Weakness Persists

Australia's consumer sentiment has rebounded sharply in August after the Reserve Bank of Australia (RBA) held interest rates, but underlying weakness may keep further tightening at bay.

The Westpac survey showed a 6% rise in consumer sentiment to 88.9 from 83.9 in July, with all sub-components rising in tandem relative to the previous month. Views on family finances and economic conditions over the next 12 months also improved significantly.

However, the rebound may not be enough to sway the RBA into raising interest rates further, as underlying growth remains soft and concerns about sustainably higher crude oil prices have eased.

AUD/USD has reached a 10-week high but is showing signs of fatigue around resistance ahead of Thursday's employment report. The US dollar index is holding above its support levels and printing a bullish hammer on Monday, which could cap gains on AUD/USD if it bounces.