Investment continues falling in Australia. Capital Expenditure (capex) dropped by 5.2% in Q1 2016, much worse than a fall of 3.2% predicted. there is a small silver lining with an upwards revision of Q4 from a rise of 0.8% to 1.8%. Nevertheless, this isn’t good news.
The Reserve Bank of Australia looks at investment trends for its decisions, as the data has the same horizon as the RBA’s decision. Such data adds to the odds of a rate cut coming sooner than later.
The Australian dollar is not crashing against the dollar on the data, but that’s due to some weakness in the greenback. Against other peers, the A$ is on the back foot.
Together with worries about China’s very rapid credit expansion, things don’t look too positive for Australia this week.
Here is a 30 minute chart of AUD/USD, showing how AUD/USD remains constrained in range: 0.7175 is the lower bound and and 0.7220 is the upper one. Strong support awaits at the recent low of 0.7140.