Australian dollar lower on weak building approvals data

THE Australian dollar is weaker following disappointing building approvals figures.

A 1 Australian Dollar coin and a 1 US Dollar note are seen in Canberra, Tuesday, May 21, 2013. As the US economy rebounds, there are predictions that the Australian dollar could fall as low as 90 US cents in the coming weeks and months. (AAP Image/Lukas Coch) NO ARCHIVING

THE Australian dollar is weaker on the back of disappointing local building approvals figures.

At 0700 AEST on Tuesday, the local currency was trading at 92.45 US cents, down from 92.51 cents on Monday.

The Australian dollar dropped below 93 US cents on Monday immediately after official figures showed approvals for the construction of new homes fell 5.6 per cent in April.

Economists had been forecasting a rise of two per cent.

“The data suggests that despite low interest rates the housing sector remains in a deep funk,” BK Asset Management managing director Boris Schlossberg said.

“That is likely to put a negative drag on Australian gross domestic product in the second quarter of this year.” It’s a busy day ahead for economic news in Australia, with a batch of official data, including retail sales, being released, as well as the Reserve Bank of Australia’s June interest rate decision.

The Australian dollar could see further selling if the RBA hints that conditions have weakened, Mr Schlossberg said.

“Although the markets do not anticipate any further easing from the RBA, the building approvals data certainly skews sentiment against the Aussie as it indicates that the RBA may be forced to reconsider its neutral stance if conditions continue to deteriorate,” he said.

Mr Schlossberg said a break below the 92 US cent level could see the currency drop further towards 90 US cents, as traders lose faith in Australia’s economic recovery.

Originally published as Australian dollar lower on weak building approvals data