The Takeaway: Australia’s AiG Performance of Services Index remained below 50 -> The softening in service-sector activities may raise concerns -> AUD/USD unmoved
The Australia’s AiG Performance of Services Index posted 45.3 in January, modestly increased from 43.2 in December last year. The last time the index has reached the 50 threshold was in January 2012 and it has stayed below 50 since then, which reinforces the case of a softening service-sector that may potentially due to the waning domestic consumption.
As for the bigger picture of Australia’s economy, the service sector and mining industry account for a large portion of Australia’s GDP. A report released last Thursday stated that S&P warned of risks to Australian economy as its mining sector face critical challenges ahead amid weaker demand from China . This news, combined with concerns over its mining industry, could weigh on the Aussie dollar in the short term.
The AUD/USD showed little change after the release of the report as market is waiting for the Reserve Bank of Australia’s rate decision that is due to come out in less than five hours.
AUD/USD 1-minute chart
Chart Created by Robin Leung using Marketscope 2.0
