Forex Marketz Daily Forex News – Fully Markets Update
This morning, the Australian dollar, including the benchmark AUD/USD, is in play and finding some support from both local and Chinese economic data.
The Australian dollar got a small boost, and held onto gains, after in-line private capital expenditure data. There was also better than expected housing and building approvals data this morning as well. Starting with the expenditures data, third quarter business investment was 1.0 percent. This was in-lie with expectations. This was an improvement over the second quarter, or should have been. However that month was revised higher from 0.8% to 1.1 percent. That made today’s print uninspiring.
More impressive is that building approvals increased 18.4 percent, annually, for the month of October. This was higher than the 14.1 percent that was expected. This was also above last month’s print of 0.2 percent. Today’s data showed the fattest pace of growth since September 2015. Which was about two years ago.
Australian Dollar Gains should remain Limited Despite Data
The Reserve Bank of Australia remains firm that their monetary policy will remain as is for the foreseeable future. The RBA left its cash rate unchanged at its record low of 1.50 percent in November, but the policy minutes also added to investor expectations that rates are going nowhere fast.
This means that the expected December U.S. Federal Reserve interest rate increase will see the Australian dollar’s long held rate advantage over the American Dollar finally come to an end. There are more Federal Reserve Board rate hikes expected even as the Reserve Bank of Australia is expected not to change their monetary policy or official cash rate anytime soon. At least for all of 2018. The prospect of a higher yielding U.S. currency will is going to limit the AUD’s international attraction among Forex traders.
