This is a special wrap for the FX traders who were asleep during the Asian session and who have an interest in the AUD. Capital Expenditure figures were released in Australia today, these figures are in important consideration for the Reserve Bank in making their interest rate decision at Tuesday’s coming policy meeting (Dec. 4).
In summary:
- Headline figure for the 3rd Q was +2.8%
- Better than the +2.0% expected
- But lower than the Q2 figure of +3.4%
- Spending plans for 2012/13 eased to A$173.4bln (from a prior estimate at A$181bln)
- Capital spending is up 14% on the year
- The important Equipment, Plant and Machinery Capex was up 6.2% for the quarter
- The strong, but weakening Capex figure is further evidence of peak mining investment
- Today’s capex figures come in the context of:
- Improving (but not great) housing data
- Inflation ticking higher
- Previous rate cut effects still filtering through the economy
- China’s economy apparently stabilizing, if not starting to accelerate
- Aust. govmt continues to strive for budget surplus
- Other sectors of Aust. economy not strong like mining
- RBA meet on Tuesday Dec. 4
- The next meeting after that is in February
- Current cash rate is at 3.25% (vs. a low of 3.00% during the financial crisis)
- Futures are pricing in a
60% 71% chance of a cut
