Australian one dollar coins
A handful of Australian one dollar coins is shown in Sydney, February 18, 2004. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian dollar has pushed lower following yesterday’s weak domestic Capex data, in
what was otherwise a very quiet 24 hours.

Australia: Markets were generally quiet yesterday with the US away for Thanksgiving. The AUD finds itself second bottom on the G10 leader board (NOK at the bottom), currently trading around 0.7220, with the unexpectedly weak capex data pushing the currency lower while most other markets moved sideways. The data for Q3 was much weaker than expected, with real capital expenditure falling 9.2% q/q in Q3. Buildings and structures posted the largest decline (-9.8% q/q), broadly consistent with Wednesday’s construction work done release. This signals weak business investment in next week’s GDP release. The outlook for nonmining capex in 2015-16 did not improve, with a sharp 8% decline still anticipated. While the RBA appears less fazed by the soft business investment outlook due to the stronger jobs market, today’s weak report highlights the challenges around the investment outlook and keeps the door firmly open for further rate cuts next year. Following the release the AUD dropped almost half a cent from 0.7260 to 0.7215. There was a small bounce in the afternoon, but with little else occurring across markets the AUD stayed in a narrow range.

Majors: As stated above, there was not much happening in offshore markets, with the US on holiday. The GBP has given back most of Wednesday’s gains that followed the delivery of the chancellor’s Autumn Statement. The NOK took a hit thanks to weaker oil prices, not helped by comments from Russia’s energy minister that Russia sees no need to collaborate with the Saudi government over oil supplies to Europe. Most other currencies tracked sideways. Today is light on the data front, with Asia likely to attract the most attention as Japan CPI and China industrial profit being released. In Europe tonight the UK GDP figure is the only major release.

Economic Calendar 27 NOV

  • JN Jobless Rate
  • EC ECB’s Knot speaks in Amsterdam
  • UK GDP QoQ/YoY
  • CA Industrial Product Price MoM

BellFx

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