The Australian dollar’s (AUD) meteoric rise over the past several years is something to be desired by other countries. However, not every nation is isolated from market turmoil and this morning’s reports showed how even Australia is subject to cyclical market contractions.
Two reports were released by the Australian Bureau of Statistics this morning at 2:30 GMT. One was a significant report which measured the percent-change in home loans for the month of April. This figure was expected to show solid growth of 2.3%, month-on-month, for the Australian housing sector but instead revealed a 1.5% contraction since March. The previous month’s 4.7% decline looks worse by comparison, but highlights the fragile nature of the housing market in Australia.
The second report was a less significant data release regarding new motor vehicle sales. It was a figure which measured the change in number of vehicles purchased since the previous month. It acts as a leading indicator of consumer optimism since the purchase of physical assets tends to represent a brighter outlook for personal income and spending levels. It also correlates to bank loans and consumers’ application for financial assistance from banking institutions.
The new vehicle sales report, like the housing data, also revealed a contraction, but by a stark 3.5%. The downturn from both indicators signals a substantial decline in consumer confidence in the Australian economy.
With fewer individuals applying for home loans and fewer Aussies purchasing vehicles, it appears more are opting to save their income as opposed to investing in physical assets. The AUD so far appears a bit shaken and could see some bearishness this week if other data doesn’t grant it some support.
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