AU Construction Still Weak, But May Be Getting Better
THE TAKEAWAY: Australia’s AiG Performance of Construction Index for February at 45.6, surpassing January’s level, but still contractionary > Upcoming AU econ data should shed light on RBA past and future rate decisions > Australian Dollar Outlook Neutral
Australia’s AiG of Performance of Construction Index for February came in at a level of 45.6, surpassing January’s level of 36.2. The Aussie did not show significant movement following the report, as the AUD/USD has been on a downward trend over the last couple of months.
While February’s level of 45.6 is the first rating above 40 since December of last year, it still signifies a state of contraction within Australia’s construction industry, which has not seen meaningful growth for 34 straight months. Slowing construction does not appear to have pushed Australian policymakers towards any stimulus activity, however, given the Reserve Bank of Australia’s March 4th decision to maintain the status quo central bank rate of 3.0%. Forex traders should look out for March 18th’s release of the minutes from the RBA’s most recent rate meeting, which should provide clues as to the RBA’s current and future monetary policy stance. FX traders may also want to look towards Australia’s unemployment rate, set to be released on March 13th, which may provide fuel for an RBA rate cut, should employment expectations not be met.
AUD/USD (60 Day Chart)
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