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Australian Construction Declined as Consumer Mood Turns

Australian Construction Declined as Consumer Mood Turns

Gary Kerdus,

THE TAKEWAY: Australian completed construction declined > Global headwinds likely weigh on Australian consumer sentiment > Markets look to Friday’s gathering, Australian Dollar flat

The Australian Dollar was little changed versus the U.S. Dollar as construction work completed contracted to -0.2 percent for the second quarter, down from +5.5% pickup in work completed over the first quarter. It appears the Eurozone slowdown has weighed heavily on Chinese production as Europe is a large consumer of China’s output. The spillover affect may be taking its toll on the Aussie economy as Australia exports much of its resource production to China and dithering demand for Chinese output typically leads to a commensurate decline in demand for raw materials.

The significant headwinds facing the global economy have seemingly cast a dark cloud over consumer sentiment as the most recent measure of confidence declined by 2.5 percent. Perhaps the dour mood is a contributing factor behind the drop-off in completed construction work.

The Australian Dollar has a propensity to trade with risk sentiment trends as the currency is perceived as high-yielding and thus a higher-risk investment. Moreover, market volume and activity have been extremely low throughout August. All eyes appear to be looking forward to Friday where the prospect of another round of QE may be revealed during the Jackson Hole Economic Symposium. Market activity is likely to pick-up whether additional quantitative easing is introduced or not.

AUD/USD, Daily Chart

Australian_Construction_Declined_as_Consumer_Mood_Influenced_by_Global_Headwinds_body_Picture_1.png, Australian Construction Declined as Consumer Mood Turns

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.