On Wednesday, the Westpac Banking Corp released an Australian Consumer Confidence data that fell 2%. That was from 104.3 to 102.2 in January. 

The dimming of consumer optimism this time related to the emergence of the Omicron variant COVID which more or less raises concerns about the potential lockdown.

The spread of the Omicron variant is actually not as severe as the Delta wave in 2021. At the time, the australia's sentiment index fell by 5.2 percent. 

The index was also slumped more sharply by 17.7% when the first wave of COVID appeared in early 2020. That situation was having a strong impact in so many aspects of life. 

The Australian Financial Condition is now better 

At the release of the survey results earlier this year, the consumers admitted that their financial condition improved compared to last year. How can we know that?

It was reflected by the family finance sub-index which rose from 89.0 to 95.6. However, Omicron's emergence appears to have clouded the financial outlook going forward.

That was judging by the slump in the family finance sub-index for the next 12 months that slumped from 111.2 to 108.1. The other situations are also quite fluctuating at this time. 

Meanwhile, the sub-index of economic conditions for the next 12 months decreased by 9.6 % from 104.9 to 94.8. The sub-index of economic conditions for the next 5 years also slumped.

That was decreased by 6.1 percent from 110.4 to 103.6. The Consumer confidence rose by 1.7% in New South Wales, and increased by 4.1% in Victoria.

Omicron Has Fading the Economy Prospect in Australia

The regions that saw a drop in consumer confidence were Western Australia (-5.1%), South Australia (-3.9%) and Queensland (-2.7%). It was based on the days released lately. 

Overall, the emergence of the Omicron variant entering Australia since November last year has clouded the economic and financial outlook for consumers

However, the impact is not as bad as the Delta variant because so far there are not many fatalities that have fallen due to Omicron. Meanwhile, The AUD/USD pair showed a movement. 

It Seeks to Strengthen Data on declining Australian consumer confidence does not have a high impact on the movement of the Australian Dollar. This situation adds the confidence. 

The Australia’s Dollar is still in a Declining Price Range

The AUD/USD pair is currently traded in the range of 0.7192 or strengthening by 0.13 percent from the daily Open price. Technically, the Australian Dollar is still in the range of price declines.

These ranges have formed in the last 4 trading days. Elsewhere, The U.S. dollar index (DXY) corrected for about 0.1% in today's trading, after briefly soaring higher.

The cause is a surge in U.S. Treasury yields in yesterday's trade. Speculation about a four-time "Fed rate hike" this year has resumed ahead of next week's FOMC meeting.

That condition was leaving the U.S. dollar gaining additional energy to counter its rivals. Fed funds futures have now begun to account for four Fed rate hike announcements throughout 2022.

USD can Stay Strong Based on Some Situations

The situation above is happened as the scale of rate hikes larger per announcement. Some analysts think that the appreciation of the USD can continue based on some reasons. 

The example is if the market participants not only expect the frequency of more rate increases, but also the higher end-of-cycle or the number of increase per "rate hike" is greater.

The analysts expect that the interest rate recalculation — and the recent shift in higher yields reflecting a higher push in expected terminal rates.

That is not just the faster pace of increases in the beginning. The aim is to support the dollar in the first half of the year.