The Australian dollar remained range-bound against the greenback yesterday following the release of weak economic data from both Australia and the US. While Australia’s construction work data for the June 2024 quarter missed estimates, the US crude inventories declined lower than the market’s expectations. Overall, the AUD/USD pair traded in a range of between 0.6770 and 0.6815 in the past 24 hours.
According to the data published by the Australian Bureau of Statistics (ABS), the country’s consumer price index rose by 3.50% y-o-y in the 12 months to July following a 3.80% rise in the previous month, surpassing forecasts of 3.40% growth.
Excluding volatile goods and holiday travel, Australia’s inflation was 3.70% in July, a decrease from 4% in June. The increase in July was led by a 5% rise in new dwelling prices, down from 5.40% in the previous month, continuing the trend of yearly price rise of about 5% since August 2023. Rental prices increased by 6.90% in the year that ended in July, a decrease from the 7.10% rise in June.
However, electricity prices declined by 5.10% in the year ending July, a decrease from a 7.50% increase in June. Gas prices grew by 2.70% in the 12 months to July, reflecting a 0.60% growth in the twelve months to June. Likewise, automotive fuel prices surged 4% y-o-y in July, down from a rise of 6.60% in the year ending June. On an m-o-m basis, Australia’s automotive fuel prices dipped by 2.60% in July.
Food and non-alcoholic prices increased by 3.80% in the year ending July, an increase from a growth of 3.30% in the previous month. Holiday travel and accommodation prices inched up 0.20% in the year ending July, after a decline of 0.70% y-o-y in June. On an m-o-m basis, holiday travel and accommodation prices decreased by 2.4% in July.
In a separate news release, the ABS stated that construction work inched up 0.10% q-o-q in the June 2024 quarter to A$64.93 billion, after a 2% decline in the previous quarter, missing forecasts of a 0.80% growth.
The growth was led by a 0.50% q-o-q rise in engineering work in the June 2024 quarter. On a y-o-y basis, the engineering work grew by 4.80% in 2Q 2024. Building work declined 0.30% q-o-q in the June 2024 quarter. On a y-o-y basis, building work fell by 1.80%.
The value of building work inched down 0.30% in the June 2024 quarter. The decline was led by a 0.50% q-o-q drop in non-residential work in the June 2024 quarter. On a y-o-y basis, non-residential work inched down 0.90% in 2Q 2024. Residential building work decreased by 0.10% in the June 2024 quarter. On a y-o-y basis, residential work fell by 2.90% in 2Q 2024.
According to the data published by the Energy Information Administration (EIA), US crude oil inventories fell by 0.80 million barrels in the week ending August 23 to 425.20 million barrels, compared with the previous week. Economists anticipated a decrease of 2.70 million barrels. In the previous week, the US crude inventories declined by 4.60 million barrels. The reported inventory is roughly 4% below the five-year average for the comparable period.
The weak economic data from both countries is expected to keep the AUD/USD pair range-bound in the short term.
Technically, the AUD/USD pair is rising after testing the support at 0.6755. The next resistance is anticipated to be only near 0.6870. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. Therefore, we anticipate the AUD/USD pair to remain in an uptrend for the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
