The Australian Bureau of Statistics (ABS) announced earlier today that the Private Capital Expenditure in the country has contracted by 2.8 per cent on a quarterly basis in the last three months leading to December 2019.
The findings of the report disappointed as the consensus forecasts projected the index to improve marginally to 0.5 per cent from the small contraction of -0.4 per cent that was recorded in the third fiscal quarter of 2019.
Australia Private Capital Expenditure. Image source: TradingEconomics.com
These are the most disappointing results in over four years, which underscores the detrimental impact that the US/China trade war was exerting on the Australian economy up until that point.
The Australian economy is especially dependent on the well-being of its Chinese counterpart, which means that any ripples in the latter’s economy are felt in the former as well.
ABS’s report from today covers a period prior to the signing of Phase One trade deal between the US and China, which temporarily alleviated the trading pressures off the markets.
At that time, the global capital markets were driven by subdued economic activity due to the prevailing trade uncertainty. Because of that, the Australian private expenditure contracted in Q4 2019.
Even so, the Australian dollar managed to recover some of its losses that were incurred against other major currencies during today’s trading session.
The AUDUSD rose by 0.51 per cent because of the presently subdued greenback, which is owing to the spread of the coronavirus fears in the states.
In doing so, the pair managed to at least temporarily bounce back from the historic low at 0.65428, which was last reached on the 16th of March 2009. Meanwhile, the ADX demonstrates the strengthening of the overarching bearish trend.
AUDUSD 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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