Disappointing Australian Economic Data Pushes Aussie Down Against the Dollar
By Anatol Thomas
The Australian economic data in retail, manufacturing and housing sectors were released and they were disappointing. The retail sales digits fell down and it caused the Australian dollar to slump against the US dollar. Immediately after the release of the data, the pair traded below $0.7600.
The retail sector lost 0.1% in the month of February, even though experts predicted growth of about 0.3%. In January, the retail sales increased by 0.4%, which makes the downfall even more dramatic. The overall sales figure is affected by the decline in retail sales clothing. The increase in the food retail sector was unable to offset the loss experienced by the clothing sector sales.
Even though the retail sector showed a decline, the manufacturing sector tried to offset. The AIG manufacturing index showed growth at 57.5, which is much greater than the 50 mark, indicating expansion of the sector, instead of the contraction.
The weakened sales figure imply that Australians are under economic pressure, which restricts them from increasing their spending. The household debt is still high and Reserve Bank of Australia (RBA) is not taking measures to reduce the interest rates. A policy meeting of the RBA on Tuesday will determine the monetary policy for the upcoming months.
The low-interest rates contributed to the growth in the housing sector, as building approvals increased in the past seven months. This also leads to increased household debt. The increasing housing price has already forced RBA to bring down the interest rates, to a mere 1.5%. RBA statement is expected to be dovish after the policy meeting.
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