Capital expenditure drops

The Australian dollar kept to its tight range this week with a mild rebound in subdued trading this morning. The upmove came despite a weak set of data which might encourage the RBA to commit to easing rates. Private capital expenditure fell 1.7% in the first quarter, missing economists’ forecasts of a +0.5% reading. Expenditure has seen three negative readings in the last year, with last quarter’s 1.3% expansion the most since 2014.

Building permits in April were also on the weak side, with a 4.7% decline month-on-month and a 24.2% drop from a year earlier. The Australian dollar traded higher after the data, rising to an intraday high of 0.6930 and has now settled at 0.6926. AUD/JPY was barely moved at 75.88 and looks set for a second consecutive daily gain.

AUD/USD Daily Chart

NZ budget shows increased spending

New Zealand’s Finance Minister Robertson presented the government’s 2019 budget today, with the highlights being a cut in the GDP growth outlook, increased spending and a bigger bond issuance plan to pay for it. 2019 GDP growth was cut to 2.1% from 2.9% while 2020 growth is pegged at 3.2%. The 2019/20 surplus was trimmed to NZ$1.3 billion from NZ$4.1 billion. He commented that the increased spending would help the domestic economy in the face of a global slowdown and heightened risks from the US-China trade spat and Brexit uncertainty.

NZD/USD is having an up-day for the first time in four days as the US dollar takes a breather from the rebound this week.

NZD/USD Daily Chart

How strong is US growth?

The US growth data for the first quarter is released today, with surveys suggesting that we can expect a slight slowdown from Q4. The latest Bloomberg survey show a spread of 2.7% to 3.4% from weakest to strongest, with a total of 67 analysts taking part. The median estimate is 3.0%.

Q1 GDP growth data from other economies has seen a slight uptick from the previous quarter, with Germany springing back to positive growth, Japan beating economists’ estimates and China maintaining its 6.4% pace.

Earlier this morning, PBOC adviser Liu Shijin said it would be no problem for China to keep 2019 GDP growth above 6.2%, within the NPC’s target rate of 6.0-6.5%.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/