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Australian dollar worst among currencies in Asia as capex disappoints

Major currencies are weaker across the board against the US dollar, but the Australian dollar is the worst of the bunch as traders reacted poorly to a batch of key economic data.

The Australian dollar was down 0.5 per cent at $0.7396, the lowest level since the middle of May. The currency initially gained as much as 0.3 per cent following Thursday’s data releases but quickly sank as traders focused on the capex data falling short of expectations.

The continued drop in the price of iron ore, a key Australian export, has also been a crutch, with the dollarydoo closing 0.5 per cent weaker on Wednesday.

Although some of the major figures, such as capex growth and the spending estimates, falling short of consensus expectations, Paul Dales at Capital Economics pointed out spending had fallen in “eight of the previous nine quarters (by total of 30%) so any rise should be welcomed with open arms!”. The rise in mining capex was the first gain in three years, meaning the sector is now a shrinking drag on the economy.

Although the strong batch of economic data failed to prop up the yen, which was down 0.1 per cent at ¥‎110.9 per dollar, the weaker Japanese currency was helping stocks, particularly exporters.

The dollar index, a measure of the US currency against a basket of global peers, was up 0.1 per cent at 96.978 in Asia on Thursday after back-to-back declines that took the greenback to its lowest level since early October.

The British pound was trading 0.1 per cent weaker at $1.288 in Asia. Sterling was battered on Wednesday by a poll showing the chances of a hung parliament in the UK’s general election this month had increased, but ultimately closed the session 0.2 per cent higher.

Chart courtesy of Bloomberg