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What has been supporting the AUD recently? - Rabobank
FXStreet (Guatemala) - Jane Foley Senior Currency Strategist at Rabobank broke down the conditions surrounding the AUD.
Key Quotes:
“Iron ore prices have continued to drop since this meeting. Following the end of the mining investment boom, Australia has transitioned into the production phase”.
“This has had a positive impact on mining related shipments as well as weighing on price. Over the past year or so, one of the greatest fears regarding the outlook for the Australia economy has related to concerns over a lack of alternative investment spending (in anything other than residential property)”.
“Although a number of labour market indicators have picked-up since the start of this year, the weakness in capital expenditure has suggested that future employment growth could be weak”.
“Last week, however, official data showed that Q2 capital expenditure grew a better than expected 1.1% q/q, suggesting that Australia is finally managing to re-invent itself following the end of the mining investment boom. This piece of data will certainly have fed the AUD’s current resilient tone”.
“That said, the equipment, plant and machinery component of this report dropped -0.9% q/q. This could provide a drag on the Q2 GDP data which is due later this week on September 3. The market expectation for this release is 0.4% q/q, down from the robust 1.1% q/q reported in Q1”.