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AUD/NZD Exchange Rate Slumps as Australian Capital Expenditure Misses

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Disappointing Capital Expenditure Prompts AUD/NZD to Slide

The Australian Dollar New Zealand Dollar (AUD/NZD) exchange rate beat a hasty retreat on Thursday following some disappointing domestic economic data.

At the time of writing AUD/NZD is down 0.6% from its opening levels on Thursday, striking its lowest levels so far this week.

Australian Dollar (AUD) Slides as CAPEX Report Disappoints

The Australian Dollar nosedived during Thursday’s trading session as markets reacted to Australia’s latest Capital Expenditure CAPEX report.

According to date published by the Australian Bureau of Statistics (ABS) CAPEX fell to -0.2% in the fourth quarter down from 1.9% the previous quarter and missing expectations of a more modest slide to 0.9%.

Nine Currency Transfers

This was the first decline in CAPEX since the end of 2016 and the result was largely on the back of a fall in non-residential investment.

However while the headline figures contributed to a fall in the Australian Dollar, analysts were markedly more upbeat about the release, thanks to a robust estimate for spending in the coming year.

Stephen Walters, Chief Economist at Australian Institute of Company Directors (AICD) said;

‘The results of the December quarter survey were encouraging, with firms upgrading their investment plans for the current fiscal year.

‘The first estimate of spending for 2018-19 came in only slightly short of economists’ expectations, which had implied a small rise in spending next year.’

New Zealand Dollar (NZD) Bolstered by Terms of Trade

At the same the New Zealand Dollar was on the rise on Thursday as markets were pleasantly surprised by the uptick in the country’s latest terms of trade data.

Official figures showed that the terms of trade rose from 0.7% to 0.8% in the fourth quarter, beating expectations they would tumble to -0.2%.

This saw the terms of trade strike a new record high, with analysts attributing it to strong dairy prices in 2017.

Sarah Williams, business prices manager at Stats NZ said;

‘Dairy prices have been generally high in 2017, with butter rising 11 percent in the December 2017 quarter to reach a new peak.’

AUD/NZD Forecast: Fall in Consumer Confidence to Weigh on the ‘Kiwi’?

Looking ahead the AUD/NZD exchange rate may be able to mount a recovery at the end of this week’s session as New Zealand publishes its latest Consumer Confidence figures, with economists forecasting that sentiment will have slipped in February.

Meanwhile a lull in data until next week’s session is likely to leave the Australian Dollar a little subdued on Friday, with any movement in the currency likely to be driven by iron ore prices.

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