The Australian dollar posted losses against the Japanese yen in the previous Asian trading session as worries over the global economy continued to weigh on the former. Also, construction work done in August declined to the lowest level in a decade, triggering calls for the government to do more to support the struggling building and construction sector. In contrast, the Samurai gained as investors continued to seek its safety.
In today’s Asian trades, the Aussie is expected to weaken versus the Samurai as the situation of the residential construction industry is unhealthy and undesirable for Australian businesses and households, while federal and state governments are too slow in taking action, said Housing Industry Association (HIA) Chief Economist Harley Dale. He added, “Federal and state governments need to get out there and act on investment and reform initiatives to help revive the residential construction industry,” which is expected to get back on track in a quarter or two.
Meanwhile, the number of building approvals dropped for a second month in July by a substantial 17.3 percent, after declining by an upwardly revised 1.0 percent in June. Private Capital Expenditure meanwhile grew slower at 3.4 percent in the second quarter of this year, after rising by 7.7 percent in the first quarter. Concerns over an economic slowdown in China and the European debt crisis are also seen to reduce the attractiveness of the Aussie. Given the foregoing factors, a short position for the AUD/JPY pair is recommended in today’s Asian trading session.
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