The Australian dollar has been propelled higher by encouraging business investment figures out of Australia, with further signs that the economy is successfully shifting away from its reliance on mining investment. Business investment jumped 1.1% in Q2, beating an expected 0.9% fall.
New Capital Expenditure
Source: Australian Bureau of Statistics
Perhaps the most encouraging part of the report is the forward looking indicators for non-mining parts of the economy. Seasonally adjusted estimates for other selected industries, where the services sector makes up the bulk of the numbers, increased by 3.4% in the June quarter. This was a positive surprise, but there’s still a ways to go before it can cover the losses coming from the mining sector. The seasonally adjusted estimate for mining was little changed, but it’s clear that investment intentions remain on a downward trajectory.
Overall, the report is encouraging but not game-changing. Non-mining parts of the economy are not expanding a quick enough pace to cover the falling levels of mining investment. This could weigh on growth in coming quarters.
AUDUSD
In regards to the Aussie, the small rays of sunshine in today’s data was enough to warm up the commodity currency. AUDUSD jumped higher but hit some resistance around 0.9375 – this month’s high. It’s possible that the market may brush aside today’s data in favour of a big USD move. In this respect, it’s worth keeping a close eye on tonight’s US Q2 GDP figures (exp. Annualised 3.9% q/q) and initial jobless claims (exp. 300K).
Source: FOREX.com
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