Morning Forex Fundamental: AUD

Morning Forex Fundamental: AUD

"It shows how housing activity in general is really quite vulnerable at the moment. We had reason to believe over the last six or nine months there was a bit of recovery underway in building, but these figures would put a question mark over that again.' - Shane Garrett, senior economist for the Housing Industry Association

Approvals for the construction of new houses rose sharply in July, the Australian Bureau of Statistics said Monday. Building approvals surged a seasonally adjusted 10.8% on month compared with analysts' forecasts of a 4.1% increase. It is a first monthly gain after two straight months of declines, while on a yearly basis building consents rocketed 28.3%. Local councils approved the construction of 14,304 new homes in July, with 8,309 houses built in private sector, while excluding houses private sector dwelling advanced 5,623. Earlier, the Housing Industry Association has reiterated its call for the central bank to lower the interest rate again by a further 25 basis points in an effort to bolster earlier signs of recovery.

As it was widely expected Australian policymakers cut its key-lending rate to 2.5% last month, as they tried to ignite growth in non-mining sectors of the economy. However, minutes from the RBA's last meeting noted that several economic indicators are pointing to a further recovery in dwelling investment, adding to signs loan approvals will rose higher from the current level, which is already the highest in over three years. Australians are expecting no changes in monetary and fiscal policies after September, when opposition leader Tony Abbott is most likely to win the general election. Abbott is expected to instill a greater sense of direction for the Australian economy.