Aussie Dollar Gains Despite Lukewarm Data
- Australian house price growth softened in 3Q but regional froth was still evident
- Business confidence inched up, but current conditions were assessed as tough
- And yet, the Aussie Dollar rose though it seems unlikely that these numbers helped
The Australian Dollar rose on Tuesday despite the release of some rather patchy economic numbers.
Residential property price rises were slower than market-watchers expected in the year’s third quarter, according to official data. Average prices rose 1.5%, below both the second quarter’s 2% gain and market expectations of a 2.5% rise.
As usual the headline number masked some stark regional differences. Sydney prices remained frothy, rising 2.6% on the quarter and nearly 7% on the year. While the likes of Sydney and Melbourne continued to do well, Perth and Darwin were still seeing price falls as the mining industries restructure to cope with lower levels of Chinese growth
The Reserve Bank of Australia has often cautioned about pockets of regional vigor in the housing market, so signs of modest cooling may make its task a little simpler. Still, the higher rates required to slow the punchier regions would not sit well with the economy more generally, especially after last week’s big growth miss.
Australian business confidence was also in Tuesday’s spotlight and it was pretty soft.
The National Australia Bank indicator found sentiment at 5 in November, a small uptick from the previous month’s score of 4. However, the “business conditions” component of the index went the other way, slipping one point from October to 5. Tougher times for retail did the damage, according to NAB. This slip took that index back to its long-term average for the first time since April, 2015.
AUD/USD got up to 0.75081, from 0.74960 before the data. Perhaps the small confidence rise encouraged some bulls but the gains may well have more to do with higher oil prices boosting demand for Australian commodity producers more generally.
After all, this morning’s economic numbers don’t argue for the fourth-quarter economic fightback which many economists have been hoping for.
Heading up despite the numbers? AUD/USD
Chart compiled using TradingView
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--- Written by David Cottle, DailyFX Research