Australian Dollar Up As Building Approvals Smash Forecasts
- Australian building approvals breezed past consensus
- They scored double-digit gains on both the month and the year
- AUD/USD certainly gained on the news, but it still looks a bit tired on its daily chart
The Australian Dollar rose smartly Tuesday after building approval data from its homeland made a mockery of analysts’ forecasts.
November’s approvals rose by a stunning 11.7% on the month, when a fall of 1.3% had been expected. Compared to November 2016 they were up by 17.1%. This was below October’s 18.4% surge but hugely better than the 4.6% gain markets had been braced for. The rise was apparently driven by a huge 30% gain in the residential ‘multi’ property area. This embraces accommodation in other forms than traditional houses to take in apartments, condos and the like.
It’s hardly a surprise that Aussie Dollar bulls should have been emboldened by strength such as this, and they duly were.
The Reserve Bank of Australia has been pleased to note in recent months that housing-market hotspots in Sydney in Melbourne which have concerned it in the past had been cooling somewhat. However, these latest data suggest that there’s plenty of life left in the Australian property sector overall.
The RBA is still not expected to raise interest rates this year, according to futures-market pricing. But Australian economic numbers have overall been quite positive (even if wages and inflation remain docile) and it is hard to see such dovish prognoses surviving should current broad trends dig in.
On its daily chart AUD/USD has had a superb run higher since mid-December. However, that impulse seems to have petered out for the moment.
There’s little reason to suppose that this is anything other than a consolidative pause and arguably a much needed one. However, it may also be noteworthy that the Aussie has run out of steam just short of the area which would attract RBA comment about the baleful effects of excessive currency strength last year. The bulls may feel some need to gird themselves before pushing on into this area, as its most unlikely that minds have changed about this at the RBA.
--- 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.