Construction Index Higher in Australia, But A Contraction Remains
THE TAKEAWAY: Construction in Australia improves MoM to 44.1 > AiG Performance of Construction Index continues to show contraction > AUD/USD Lower
The AiG Performance of Construction Index came in at 44.1 for the month of July, outperforming June’s 39.5 reading. Although a month over month improvement has been seen, the indicator has failed to show expansion since May of 2010.
A survey tracking construction related orders, deliveries and costs, the AiG Performance of Construction Index is an indicator that provides an overview of the growth in the Australian property sector. The index measures not only residential, but commercial and engineering construction as well. Readings above 50.0 signal an expansion while those below indicate a contraction.
Source: FXCM Marketscope
The Aussi has had a volatile past 24 hours with the RBA deciding to cut its key benchmark interest rate by 25bps to 2.50% from 2.75%. This comes after the economy has faced headwinds, more specifically the mining sector, following slower growth out of the country that it depends on most for exports: China. Although the AUD/USD pair often appears to have exhausted its decline, it continues to move lower. Markets had priced in the possibility of a 50bps cut from the RBA, so over the past 24 hours the Australian Dollar has seen some minor support. This may be short lived as the AUD/USD pair appears to be facing strong resistance at the 90 level.
Gregory Marks, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.