The latest resurgence of coronavirus infections across Victoria – the second most populous state, has driven Australia’s consumer sentiment lower for the second straight month. The Westpac-Melbourne Institute consumer sentiment index declined by 5.2% in June, a more severe rate of decline than the 4.8% fall seen during May.

The index came in at 107.2, remaining above the 100-threshold indicating optimism, although it has been declining even as the economy shows signs of rapid recovery. In Victoria, which has gone into a fresh lockdown mode, the sentiment dropped by 7.5%.

Consumers have reported feeling less upbeat about the state of their household finances since the past year, with its sub-index registering an 8.5% drop. Meanwhile, they are also slightly less optimistic about their finances over the coming 12 months, with its sub-index declining by 2% in June.

Chief economist at Westpac, Bill Evans, notes, “The latest fall in June is almost certainly due to concerns around the two-week lockdown in Melbourne. The survey was conducted during the first week of the lockdown.”

AUD/USD continues to trade around the 0.7700 level amid thin volatility in the forex markets ahead of tomorrow’s ECB decision and US CPI data. At the time of writing, AUD/USD is trading around 0.773, holding above the key 0.7700 level due to a weakness in the US dollar.