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Australian Dollar Gains as Capex Data Boosts RBA Policy Bets

Australian Dollar Gains as Capex Data Boosts RBA Policy Bets

Bradley Kearns, Contributor

Talking Points:

  • Australian capex revised nearly 10 percent higher for end of year
  • The Aussie Dollar rose 0.25 percent against its US counterpart
  • Aussie front-end government bond yields rallied with the currency

The Australian Dollar rose as guidance in the second-quarter capex report offered support to RBA monetary policy expectations. The currency rose as much as 0.25 percent against its US counterpart. The headline business investment reading was worse than expected, showing a contraction of 4 percent. Economists expected a 2.5 percent decrease ahead of the release.

However, the outlook for capex investment in the 2015-16 period was revised sharply higher by 9.9 percent compared with prior estimates, painting a rosy picture of things to come. This may bode well for the data-dependent RBA. Indeed, front-end government bond yields rallied alongside the Aussie following the release, suggesting the data poured cold water on the probability of future interest rate cuts.

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

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