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Australian Data Disappoints: Does It Point to Easing by the RBA?

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Aug. 2 2016, Updated 7:57 a.m. ET

Australian building approval

The Australian approvals were published by the Australian Bureau of Statistics ahead of the RBA’s (Reserve Bank of Australia) monetary policy. Building approvals fell by 2.9% on a month-over-month basis. This was well below the forecasts of an estimated rise of 0.9%. It would work towards increasing the odds of a rate cut by the RBA during the monetary policy meeting scheduled for today. The drop was highest in Western Australia and Tasmania—approvals fell by 5.2% and 3.7%, respectively. The rise in the Northern Territory and South Australia partially offset the fall. Building approvals rose by 3.6% and 1.6% in these regions.

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Australian trade balance drops to lowest level in four months

The Australian trade balance data indicate the difference in value between exported and imported goods. The data came out on a disappointing note on August 2. The Australian trade deficit rose to 3.2 billion—compared to forecasts of a 2.0 billion deficit.

Impact on the market

Australian ETFs were trading on a negative note on August 1, 2016. The CurrencyShares Australian Dollar Trust ETF (FXA) fell by 0.95%. Meanwhile, the iShares MSCI Australia Index Fund ETF (EWA) followed a similar trajectory. However, it fell by 1.1%.

Australian ADRs (American depositary receipts) trading on US markets were also trading on a negative bias. BHP Billiton (BHP) fell by 1.6%. In the mining sector, British-Australian multinational Rio Tinto (RIO) fell by a 0.43%. Australian banking ADR Westpac Banking (WBK) was also trading on a negative bias. It fell by 1.3% on August 1, 2016.

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