The AUD found its’ wings against the USD yesterday after Building approvals smashed expectations and last month’s growth.
Building approvals are an excellent gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building. Construction is important because it produces a wide-reaching ripple effect. For example, jobs are created for the construction workers, subcontractors and inspectors are employed and various services are purchased by the builder, thus more economic prosperity!!!
Today the expectations were pretty bearish against the AUD, as they were 1.1%. The Building approvals figure came in at 3%, almost 100 basis points higher than last month, which was 2.1%. Needless to say, investors pressed the buy button on the AUD which created a buying frenzy which lasted almost 60 pips. Heading in to the European session we found a slight slackening of that figure, however it still held most of that ground at close of business.
The trade balance figure was not the best out of the Australia economy; as they came in at near expectations of -790 Million for the month of September. However, this is still a vast improvement on past performances; this being almost 250 Million better off than August.
Tonight all eyes are on the Employment figures from the US; which shall have the final say on the proposed AUD/USD floor at around 0.87. Given that they are expecting 216,000 new jobs created from last month’s 142,000 we may see the USD continue the trend.
The AUD/USD exchange rate will be quite volatile heading into the weekend, with the releases of the USD data commencing from 10.30pm AEST.