A one Australian dollar coin ($1.09) is seen in this picture illustration taken in Sydney April 29, 2011.
IN PHOTO: A one Australian dollar coin ($1.09) is seen in this picture illustration taken in Sydney April 29, 2011. The Australian dollar consolidated near recent highs against a broadly weaker U.S. currency on Friday and within spitting distance a huge chart objective at $1.1000, having enjoyed its best month so far this year. REUTERS/Daniel Munoz

Bell FX Currency Outlook: The Australian Dollar is trading at a six week low following the release of weaker than expected Australian business investment data yesterday.

Australia: The AUD is currently trading around 0.7650, down a cent from yesterday morning. The main driving force behind the move was a weak Capex report, confirming the woes of the non-mining sector. The survey suggests that non-mining businesses expect to cut their expenditure by 10% in 2015-16. This is even weaker than the estimate of three months ago, which was already considered a particularly weak result. Real capex fell 4.4% in Q1, with machinery and equipment investment, which is the only part of this survey that feeds directly into GDP, falling 0.5% in the quarter. This soft result poses some downside risk to GDP forecasts. The NZD also weakened sharply and touched a new cycle low on the back of a dovish research article from the RBNZ on inflation. The RBNZ paper found that “with the benefit of hindsight, there remains a portion of current low inflation outturns that is difficult to account for”. The fact is that core inflation in New Zealand has been below 2% for more than five years and benign readings from the NZ Monthly Inflation Gauge point to a structural element in low inflation. Today sees the release of HIA new home sales and private sector credit in Australia.

Majors: The USD pushed to a 12-year high against the JPY last night, buoyed by investors betting that the US has emerged from its economic slowdown and is moving toward higher interest rates. The EUR is also trading higher for a second consecutive day, as investors continue to grapple with conflicting headlines regarding a possible agreement between Greece and its creditors. The euro increased 0.4% to $1.0948.Tthe GBP is lower after UK Q1 GDP growth was unrevised at 0.3% q/q (mkt: 0.4%). Consumer spending and business investment rose, while exports declined modestly. US stocks slipped overnight, pulling back one day after the Nasdaq Composite notched a record high, as initial jobless claims rose to 282k (270k expected) from an upwardly revised 275k last week, with the four-week moving average bouncing from 15 year lows. Also released overnight, US pending home sales increased 3.4% m/m (mkt: +0.9% m/m) in April. US data will be the focus tonight, with the release of GDP, personal consumption data and the Chicago PMI for May.

Economic Calendar 29 MAY

  • JN Natl CPI YoY
  • JN Industrial Production MoM Apr
  • AU Private Sector Credit MoM/YoY Apr
  • US GDP Annualised QoQ revision 1Q

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