Australia’s economy is vulnerable to a significant slowdown in the mining sector, a report from ratings agency Standard and Poor’s has warned.
Following yesterday’s release of the report the Australian dollar fell, trading at $US1.0393, down from $US1.0473 on Wednesday and well below its January peak of $US1.0575.
The company examined a number of single sector reliant countries and said Australia was at an intermediate risk of a slowdown in the resources sector.
But OzForex head of corporate dealing Jim Vrondas said weak gross domestic product data coming out of the US had prompted the drop of the Aussie dollar, SMH reported.
"We saw the discussion resurface about whether the US economy was entering another recession, or heading that way again," he said.
"That didn’t help the Aussie much."
Official data released overnight showed the US economy contracted 0.1 per cent in the December quarter.
Vrondas said US data would continue to influence Australian bonds, with non-farm payrolls data due to be released tonight.
Non-farm payrolls data is an economic indicator for the state of the US labour market and includes data from goods-producing, construction and manufacturing companies.
"Tomorrow night we’ll have the next key event for the market, with payrolls data," Vrondas said.
Following the release of the non-farm payrolls data, Vrondas added the the focus would return to local events.
The Reserve Bank of Australia is meeting on February 5 for its cash rate decision.
The RBA’s December meeting resulted in the cash rate being lowered by a quarter of a percentage point, to 3 per cent.
In November, Australian Mining reported RBA governor Glenn Stevens said the mining boom was different, not dead, and reports of its demise had been "overhyped".
In a speech to the Committee for Economic Development of Australia Stevens said the mining boom had moved to its final of three phases.
“As a matter of fact, talk of the ‘end of the mining boom’ has been somewhat overhyped,” he said.
“The ‘boom’ is not so much ended as simply evolving, as these events would be expected to.”
Stevens said each boom had three phases, with the first being a rise in prices and the second being a rise in investment.
“The third phase of the boom is when the capacity to extract and export higher quantities of resources is actually used,” he said.
Stevens said while the final phase was still in the future for most of Australia’s sector, the industry would contribute less to the future economy than it had in previous years.