Australian Dollar Steady as Construction PMI Robust
- The Australian construction sector enjoyed an upbeat June according to the latest snapshot
- Activity expanded across all areas of the industry except for apartment building
- The latest news completes a hat trick of expansionary surveys from the Aussie economy
The Australian Dollar was steady Friday after a construction survey found the nation’s builders in rude health despite a very modest decline in the pace of acceleration.
The Performance of Construction Index from the Australian Industry Group came in at 56.0 for June. This series is exactly like the Purchasing Managers Indexes widely published across national economies in that any reading above 50 signifies a sector in expansion. However, the index was a shade lower than May’s 56.7 but perhaps that is not too surprising given that that was a 32-month high.
The AIG reported that construction remained firm across most sectors but that apartment building weakened significantly, albeit after a very strong previous month. Friday’s release completes a hat-trick of expansion for Australia’s economy in June, with construction, manufacturing and services all doing relatively well.
However, the Reserve Bank of Australia has maintained a neutral monetary policy tone even as other central banks have ramped up the hawkish rhetoric. Australian interest-rate futures markets suggest that while investors firmly believe that that the record-low, 1.5% Official Cash Rate will rise, it will not do so until the second half of 2018, at the earliest.
The construction PMI release does nothing to challenge this thesis which may go some way toward explaining AUD/USD’s muted reaction to it.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.