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Jul 18

Australian Dollar hits two-week low on weak economic data

The local currency was down half a US cent on Monday. The local currency was down half a US cent on Monday.
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The local currency was down half a US cent on Monday.

The local currency was down half a US cent on Monday.

The Australian dollar lost more than half a US cent on Monday after a string of soft domestic and overseas data unnerved investors.

In late local trade the Aussie was fetching about US87.34¢, compared with US87.88¢ at the same time on Friday. The currency had earlier dropped as far as US87.04¢, its lowest since mid-October.

The local unit came off recent highs above US88¢ late on Friday when the Bank of Japan surprised global markets with a broader-than-expected asset-buying program, triggering a surge in the greenback. The Aussie also firmed against the Japanese yen, up about 2 per cent to ¥98.4 since Friday’s BoJ intervention.

On Monday, however, the focus switched back to domestic and Chinese economic releases, most of which showed continued patchiness in both economies.

Most surprising was a sharp month-on-month drop in building approvals in Australia, led by multi-dwelling construction such as apartment blocks. This category fell 21.5 per cent for the month, for a 34 per cent decline in the year to end-September.

The figures, which were well below analysts’ expectations, followed earlier data showing a slowdown in dwelling price growth across Australia, although the national data masked continued strength in Sydney and Melbourne.

Economists also stressed that the building approvals data had slipped off a high base.

“Looking through the volatility, the trend in building approvals has broadly flat-lined over the last six months at elevated levels,” said ANZ in a note.

“Looking ahead, we expect low interest rates, increasing home prices and solid housing investor demand will continue to support a solid cyclical upturn in housing construction,” the bank said.

The Aussie also slipped on weak services output figures from China, although it rebounded slightly on more promising signs from the country’s manufacturers.

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