Australian Coins
The Australian Dollar fell in early morning trade after the credit ratings firm Standard and Poor made a warning over the outlook for the Australian economy. Against the US Dollar the currency slipped to $US1.04 down from $US1.047.
The firm warned that risks to the Australian economy could come from a possible slowdown in investment to the nation’s key mining industry.
Terry Chan, a credit analyst at S&P, said most at risk from a “investment overhang” are commodity-exporting nations including Australia, which faces an “intermediate” risk of a deep slowdown – one notch below the highest warning.
“We believe the level of a country’s investment overhang can be a leading indicator of a potential economic correction,” he said. Over the past few years the Australian mining sector has been the driving force behind the country’s economic strength but investment is expected to lessen in the second half of 2013.
As a result of S&P’s warning economists are looking to the Reserve Bank of Australia to see if it will take any action in response. Since November 2011 the Bank has cut interest rates by 1.75% but most economists believe that the bank will wait before making further cuts.
The ‘Aussie’ shook off the S&P warning as the day progressed thanks to the release of a number of encouraging economic data reports.
New home sales rose by 6.2% in December according to data published by the Housing Industry Association.
“This year should be a good year for the Australian housing market,” said Paul Bloxham, chief economist at HSBC Australia. “Today’s new home sales data supports our view that the housing construction cycle has turned.”
As a result of the housing data the currency recovered most of its earlier losses but remains vulnerable to volatility caused by news from other parts of the world.
As of 10:40am
The Australian Dollar to Euro exchange rate is currently trading at 0.7682
The Australian Dollar to Pound exchange rate is currently trading at 0.6588
The Australian Dollar to US Dollar exchange rate is currently trading at 1.0418
The Pound to Australian Dollar exchange rate is currently trading at 1.5182
The Euro to Australian Dollar exchange rate is currently trading at 1.3015
The US Dollar to Australian Dollar exchange rate is currently trading at 0.9599
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