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Recap: Australian Q2 growth figures - ANZ

FXStreet (Bali) - ANZ provides a recap on today's Aus Q2 GDP, which came at +0.5% vs +0.4% expected, noting that they remain encouraged by the improvement in business investment intentions and continue to expect moderate growth through 2014.

Key Quotes

"GDP grew 0.5% q/q in Q2, above median economist expectations for a +0.4% q/q rise. Q1 growth was unchanged at 1.1% q/q, while annual growth rose to a solid 3.1%."

"The details of the report were broadly in line with our expectations, although profits fell more than we had anticipated. Consumer spending grew moderately, business investment fell, and public spending rose solidly. A substantial drag from net exports was more than offset by a large contribution from stocks."

"A 0.5% q/q gain in GDP is a particularly good result given it follows a strong 1.1% gain in Q1 and leaves six month annualised GDP growth at a solid 3.1%. While this is an encouraging result given the headwinds the economy is currently facing, we would caution at extrapolating it out too far. That is, the drag from the wind down in mining investment still has a long way to run and is likely to be much sharper over coming quarters as large-scale LNG projects approach completion. Moreover, the non-mining recovery remains tentative with the structural weight of the falling terms of trade and lower public spending likely to weigh on growth for some time."

"That said, we remain encouraged by the improvement in business investment intentions and continue to expect moderate growth in the economy through 2014 as the economy transitions from mining investment led growth to non-mining drivers of growth."

"These numbers look to be broadly in line with the RBA’s forecasts in the August Statement on monetary policy although we expect that the Bank will be encouraged by the ongoing evidence of the transition to non-mining drivers of growth.

"That said, we don’t think the Bank will be swayed from its on-hold stance, with the Governor continuing to signal that the Bank is on hold for some time, with the gradual nature of the recovery unlikely to generate significant improvement in the unemployment rate for some time."

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