The Australian dollar has produced a remarkable slump, falling below parity with the US dollar for the first time since March.
The five-month low was attributed to higher-than-expected annual inflation in China, which at 6.5% for July is feared will challenge the nation’s ability to stimulate growth.
The local currency has fallen nine straight days now, taking it towards the longest losing streak since floating.
The dollar has fallen from $US1.09 to US99.94c in the past week.
Business conditions fell in July, according to the latest figures from the NAB monthly business survey, in a third consecutive decline.
The bank says the conditions show that the economy is now beginning to lose momentum.
“Growth in the domestic economy weakening in July, with business conditions now indicative of below-trend growth. This weakening trend was broad based – with the falls most pronounced in finance and business services (reflecting recent global uncertainty and volatility associated with US and European debt issues), manufacturing and the service sectors,” NAB said.
“The overall picture remains quite subdued, with trend business conditions deteriorating for a third consecutive month,” the survey said.
Business confidence rose two points to +2, but NAB said this is still subdued due to both the debt situation in the United States and the high dollar.
However, it also found that the carbon tax announcement appears to have had no impact on confidence overall.
Housing finance figures released this morning have disappointed, with a flat result for June versus expectations of an edging up.
The Australian Bureau of Statistics says there were 49,175 loans during the month, slightly up from the May’s 49,167 figure.
The statistics bureau says the value of loans for owner-occupied properties was flat at $14.1 billion, while the value of loans for investment homes dropped 4.4% to $6.1 billion.
Meanwhile, National Australia Bank has seen its shares fall 1% despite reporting a 27% jump in third-quarter cash profit.
The Melbourne-based bank met expectations with a $1.4 billion quarterly cash profit, an increase of $300 million from the previous corresponding period and setting it up for a record annual profit.
Chief executive Cameron Clyne said the bank was in good shape but it was “fair to say we are operating in an uncertain macro environment.”
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