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    Aussie weaker despite upbeat construction survey as politics eyed

    The Aussie held weaker on Thursday in Asia despite upbeat construction estimates for June as investors awaited the final word on last week's federal election with Liberal Party leader Malcolm Turnbull possibly set to return as prime minister of a coalition government.

    In Australia, the AIG construction index for June jumped to 53.2, marking a leap into expansion territory from 46.7 the previous month.

    AUD/USD traded at 0.7512, down 0.12%, while USD/JPY changed hands at 101.14, down 0.18% and GBP held at more than three decade lows, down 0.14% at 1.2914.

    AI head of policy Peter Burn said the residential sub-sectors were the standout performers both in current activity and in new orders, suggesting they are on track to continue their expansionary run over the near term. "While making positive contributions to current activity, the commercial and engineering construction sub-sectors both recorded a drop in new orders in June, providing less cause for optimism about the first quarter of the new financial year," he added.

    HIA chief economist Harley Dale said the results serve as a reminder that new residential construction remains the powerhouse of the domestic Australian economy. "At the same time, non-residential construction has some spark to it, but the breadth of recovery is still proving elusive," Dale said.

    The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.15% to 96.13.

    Earlier, minutes from the Federal Reserve's June meeting showed caution on the path of rate hikes going forward, while noting inflation bears watching.

    Overnight, the dollar moved back higher against the other major currencies on Wednesday, after the release of strong U.S. service sector activity data and as concerns over the global ramifications of the Brexit vote continued to support demand for safer assets.

    The Institute of Supply Management said its non-manufacturing purchasing manager's index rose to an eight-month high of 56.5 last month from 52.9 in May. Analysts had expected the index to rise to 53.3.

    The report came after the U.S. Bureau of Economic Analysis said the trade deficit widened to $41.14 billion in May from $37.38 billion in April, whose figure was revised from a previously estimated deficit of $37.40 billion.

    Analysts had expected the trade deficit to widen to $40.00 billion in May.

    The pound remained under broad selling pressure as Britain’s shock decision to leave the European Union continued to fuel uncertainty over the consequences of the U.K. vote on the country’s economy.The Bank of England warned on Tuesday of “challenging” risks to financial stability following the Brexit vote and eased regulatory requirements on the banking sector.

    BoE Governor Mark Carney said the move represented a "major change" that would help the economy to cope with the Brexit consequences.

    New York Federal Reserve President William Dudley said on Tuesday that the U.S. economy was on the right track but added that any signs of post-Brexit instability in the EU could have more severe consequences for the U.S.

    On the other hand, Fed member Daniel Tarullo said on Wednesday said there is no need to raise U.S. interest rates until there is evidence inflation is moving towards the Fed's target on a sustained basis.


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