Australian Dollar (AUD) Exchange Rate Softens after Dismal Aussie Home Loans Report
Less-than-impressive economic data from Australia and China left the ‘Aussie’ in a slightly weaker position against several of its most traded currency counterparts.
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The South Pacific asset edged lower against the Pound and US Dollar after retail sales and industrial production figures for China (Australia’s main trading partner) came in below estimated levels.
The 11.9 per cent year-on-year increase in Chinese retail sales was less than the 12.2 per cent estimate.
Meanwhile, industrial production in China climbed by an annual 8.7 per cent last month, down from an increase of 8.8 per cent in March and less than the 8.9 per cent forecast.
On the home front, Australia’s house price index reported a quarterly gain of 1.7 per cent in the first three months of the year.
A climb of 3.0 per cent had been anticipated.
Australian home loans dropped by 0.9 per cent in March, defying expectations for a 1.0 per cent increase.
Investment lending and the value of loans were both down by 0.8 per cent.
In the view of one foreign exchange analyst; ‘a weaker than anticipated home loans print left the currency with mixed clues. The strength in the housing market remains on the Reserve Bank of Australia’s radar. However, the latest data is unlikely to bolster expectations of action from the central bank to cool house prices. A rough Federal budget may also put pressure on the Australian Dollar over the near term, given the potential headwinds posed to Australian economic growth would likely lead the RBA to delay future rate hikes.’
While the ‘Aussie’ was weaker against the US Dollar in the aftermath of these data releases, fluctuations in the AUD/GBP pairing were a little stilted due to a lack of influential UK news.
Before the close of trade the AUD/USD exchange rate could weaken further if US retail sales are shown to have climbed by more than the 0.4 per cent projected.
US advance retail sales figures are due out at 13:30.
Of course, the Australian federal budget will also be of particular interest.
The Australian Dollar is currently trading against the US Dollar in the region of 0.9342 and trading against the British Pound in the region of 0.5541.