Australian Dollar Buffected by Local

 
  By James Glynn 
 

        SYDNEY--The Australian dollar was pressured Monday by weak China data and disappointing local building approvals raising questions about the overall strength of the economy.
        At 0500 GMT the Australian dollar was trading around US$0.9266 compared with US$0.9274 late Wednesday.
        The Aussie dollar began trading in Asia above US$0.9300 after U.S. employment data on Friday. While the U.S economy created 288,000 new jobs in April a closer look at the report showed wages growth in the world's biggest economy was weak while participation in the job market also fell to its lowest since 1978. The U.S. dollar weakened allowing the Australian dollar to rise.
        Still, the Aussie soon came under pressure Monday on news that building approvals fell for a second consecutive month in March. A Chinese manufacturing report was also soft.
        The number of Australian home building permits fell 3.5% in March--the fifth monthly fall in the past half year--raising new doubts about the contribution of housing construction to an economic recovery.
        "Dwelling approvals came in a touch softer than expected in March although the broader picture is still of activity topping out at a high level," Westpac economist Matthew Hassan said.
        Still, most economists said it wasn't time to panic about the strength of the housing market because approvals to build new dwelling have surged 20% in the last year.
        "We don't think today's fall in March building approvals following a sizable decline in February is signaling the housing market is beginning to weaken," CIMB economist Shane Lee said.
        "Building approvals have been at historical peak levels since September last year...so it shouldn't be a surprise that approvals have softened a touch at these high levels in the past couple of months," Mr Lee said.
        Also Monday the final HSBC Manufacturing Purchasing Managers' Index for April edged up to 48.1 from 48.0 in March but remained below the key 50 level which separates contraction from expansion on a monthly basis. The index is a gauge of nationwide manufacturing activity.
        Tuesday might bring some conflicting leads for the Australian dollar with trade data for March expected to show another healthy surplus of around 900 million Australian dollars for the month highlighting strong growth in the country's mining exports.
        Still, the Reserve Bank of Australia is expected to keep interest steady at a record low 2.5% at a policy meeting.
        Write to James Glynn at james.glynn@wsj.com
        (END) Dow Jones Newswires

        May 05, 2014 01:27 ET (05:27 GMT)