The Australian dollar has jumped on Wednesday after building approvals and construction data were sharply higher than predictions.
Better than expected economic figures drove the Aussie higher, sending it as high as 79.93 US cents. Prior to the release of the figures, the currency was at around 79.68 US cents. At 12:30pm, the dollar is fetching 79.88 US cents.
The Australian Bureau of Statistics data showed that while approvals for the construction of new homes fell 1.7 per cent in July, it was a slide less than forecast by economists.
Weakness in the apartment category dragged down overall activity but the number was sharply below the 5 per cent figure that had been predicted.
The amount of construction work done rose 9.3 per cent in the June quarter, well ahead of economists’ expectations of a 1 per cent increase.
Approvals for private sector houses remained steady in July, while the ‘other dwellings’ category, which includes apartment blocks and townhouses, slipped 6.7 per cent, the Australian Bureau of Statistics data on Wednesday showed.
Total dwelling approvals had risen by a revised 11.7 per cent in June, but over the 12 months to July, approvals are down 13.9 per cent.
The renewed weakness comes amid tighter lending conditions and the Reserve Bank of Australia’s warnings about the rising level of housing debt.
The Australian Prudential Regulation Authority capped interest-only mortgage lending on March 31, telling lenders to limit higher risk interest-only loans to 30 per cent of new residential mortgages.
That set off a fresh round of rate increases by the major lenders, with banks repricing their loan books to make interest-only and investor loans more expensive.