Australian dollar flat ahead of key data

The Australian dollar was little changed today as global markets were stuck in holiday mode, while key business investment data also looms.

The Australian dollar was little changed today as global markets were stuck in holiday mode, while key business investment data also looms.

At 5pm (AEST), the Australian dollar was trading at US77.95c, down from US78.31c yesterday.

A speech by RBA Deputy Governor Philip Lowe tomorrow will be closely watched. The central bank recently cut interest rates but kept in place an easing bias. Some economists say the bias is only implied, leaving Mr Lowe scope to strengthen the language.

“The Australian dollar was anchored alongside the rest of its most liquid counterparts through the past session by the speculative drain created by the holiday conditions for key financial centres around the world,” said John Kicklighter, chief currency Strategist, FXCM.

First quarter Australian business investment data on Thursday is expected to further highlight one of the key weaknesses of the Australian economy — falling investment.

With a decade-long mining investment boom now over, and commodity prices sharply lower, the mining industry is no longer investing, while industries outside of mining have yet to respond vigorously to record low interest rates.

While investment falls, the prospect of even lower interest rates is high, economists say.

Earlier, a survey by ANZ-Roy Morgan showed consumer confidence down in the last week, giving back some of the jump in sentiment seen just after the government announced its 2015-16 budget on May 12. The government announced tax cuts and concession for small business in a bid to bolster spending in the economy.

“The fall of 1 per cent in consumer confidence last week only slightly reverses the lift seen in the previous two weeks,” said Warren Hogan, chief economist at ANZ.

The response to the budget this year has been much more positive than last year, and confidence now stands around 14 per cent higher than levels recorded a year ago.

“The lift in confidence is unlikely to be sustained if key measures do not pass through the parliament,” Mr Hogan added.