The Pound to Australian Dollar exchange rate edged higher on Tuesday after data out of Australia and China disappointed economists.
Domestic data showed that house price inflation in Australia increased by 1.7% in the first quarter of 2014. The figure was well below economist expectations for an increase of 2.9%.
House price inflation in the preceding quarter was revised higher to 3.8% from 3.4%.
Another report showed that home loans in Australia declined by 0.9% in March, confounding expectations for an increase of 1.1%. The rise was short of the previous month’s figure of 2.3%.
Also weighing on the domestic front are expectations that today’s Australian Budget will make for grim reading.
Economists are expecting Treasurer Joe Hockey to announce wide spread spending cuts and the axing or merging of several federal departments in order to send the budget back above surplus levels.
“This is a problem-solving budget because we do have a very serious problem of debt and deficit, stretching as far as the eye can see, but it’s also a nation-building budget,” said Prime Minister Tony Abbot in an address to Government MPs.
Data out of China, Australia’s largest trading partner also put some pressure on the ‘Aussie’.
According to China’s National Bureau of Statistics, retail sales in the nation rose by 11.9% in April from the previous year, a slowdown from the previous reading of a 12.2% increase.
More worryingly for Australia was a separate report which showed that industrial production in China increased by 8.7% in April from the previous year, a figure which was lower than the 8.8% yearly increase recorded in March.
The reports did little to ease concerns that the world’s second largest economy is slowing down.
“Disappointing Chinese figures are undoubtedly behind the dip,” said FXCM Market analyst David de Ferranti.
The Pound meanwhile remains supported from expectations that the Bank of England will increase its growth forecasts for the UK economy at tomorrow’s inflation report.
Expectations are also high that the UK’s unemployment rate will fall from 6.9% to 6.8%.
The number of people claiming jobless benefit is also expected to fall and earnings are forecast to go up.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.9334 ,
Australian Dollar,,Pound Sterling,0.5535 ,
Australian Dollar,,Euro,0.6783 ,
Australian Dollar,,New Zealand Dollar,1.0826 ,
US Dollar,, Australian Dollar ,1.0709 ,
Pound Sterling,, Australian Dollar ,1.8055 ,
Euro,, Australian Dollar ,1.4749 ,
New Zealand Dollar,, Australian Dollar ,0.9237 ,
[/table]
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