The AIG Construction index has continued its trend lower with the latest data released yesterday showing a fall to 52 on the index following weaker building approvals and a generally softening construction and property market during 2017. Above 50 indicates expansion while below 50 indicates contraction in the construction industry, so if the index continues to decline we could expect to see increased downward pressures on the housing market by way of weaker construction numbers and the before mentioned stalling in building approvals.
The Aussie dollar however has managed to hold up pretty well with AUD/USD still above 0.7800, while AUD/EUR and AUD/GBP are trading at 0.6550 and 0.5778 respectively on the back of a very bullish commodities sector led by iron ore and the electric vehicle metals (Lithium, Cobalt, Copper and Nickel).
Building Approvals and ANZ Job Ads are due out this morning at 11.30am. Building Approvals are tipped to come in weaker again at -1% or thereabouts, while ANZ Job Ads have no forecast. As mentioned above building approvals have very much stalled since August with negative or flat growth since then - you need to go way back to late 2008, following the GFC to find a similar picture. How the housing market plays out with respect to a soft or hard landing remains to be seen, however caution is probably the best bet.
AUD EXCHANGE RATES:
AUD/USD – 0.7840
AUD/GBP – 0.5778
AUD/EUR – 0.6551
AUD/NZD – 1.0923
AUD/JPY – 88.653
Gold – A$1683/oz
Silver – A$21.85/oz
WTI – US$61.91/barrel
DATA RELEASES TODAY:
AUD – Building Approvals and Job Ads at 11.30am
***Above rates are indicative wholesale rates and intended as a guide only***
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