The Aussie dollar has rallied to its highest level in more than a week to 0.9281 against the US dollar after the release of capital expenditure data today.
The battler was trading below 0.9230 before the data drop.
At first blush this may seem incongruous given the sharper than expected fall in first quarter capex of 4.2% but as Business Insider wrote earlier today the underlying trend in capex looks solid.
It’s the upgrade in 2014-15 capex plans that has helped but equally other internal factors are important in pushing up expectations of Q1 GDP which is to be released next Wednesday.
ANZ’s economics team said:
Machinery and equipment investment, which is the only part of this survey that feeds directly into GDP, rose 2.8% q/q which was stronger than we were expecting. As such, these data provide upside risks to our preliminary Q1 GDP forecasts
While it is clear mining investment has turned lower, the good news is the pick up in services and non-mining capex is a sign that the economy is transitioning.
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