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Aussie Data Signals Weakness Ahead

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Australian Home loans declined by -4.5% versus expectations of -0.7% drop as approvals from the flood ravaged state of Queensland fell by a whopping -16.4%. Although the drop in January may have been exaggerated by the natural disasters that befell the country at the start of this year, the general tenor of economic data from Australia suggests that overall growth may be starting to cool.

Today's Westpac consumer sentiment survey also showed weakness with the index falling to a nine month low of 104.1. The drop was driven by the opposition to the proposed government carbon tax as Australian consumers become increasingly concerned about their household finances.

Given the latest data from Australia, the prospect of another RBA rate hike in H1 of this year looks increasingly remote. The AUD/USD fell to a low of 1.0060 in Asian trade but has been able to rally to 1.0080 on some corporate demand at the start of the European session. Nevertheless with rate expectations clearly curbed for the time being, we believe that the Aussie will have a difficult time making any upside progress in the foreseeable future and if risk aversion flows accelerate the pair may tumble to test the key 1.0000 barrier as the day progresses.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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