The Australian dollar is trading higher today on the back of strong local data which dampened expectations of any further interest rate cuts.
At 7.55am (GMT) the Aussie dollar was trading at US72.35c up from US71.60c in yesterday’s trade.
The latest building approvals figure from Australia came in at 3 percent in April against analysts’ expectations for a figure of minus 3 percent while the yearly figure hit the market at 0.7 percent, well above expectations for a decline of minus 6.5 percent.
The news may come as a surprise for the reserve bank of Australia who recently cut interest rates in part due to the slowdown in the housing market.
Some economists now predict that the further rate cuts expected by the market may not eventuate as it may further boost the property market which is exactly what the RBA doesn’t want.
The strength in the Australian dollar is not expected to last as the market gets ready for another rate hike from the US Federal reserve after a speech over the weekend from fed president Janet Yellen who was more hawkish than in past speeches and seemed to acknowledge that the timing for a rate rise was near.