Dollar falls on weak housing data
May 12th, 2008 - Category: Real EstateAt 12noon (AEST), the Australian dollar was trading at $US0.9372/77, down from Friday’s close of $US0.9421/25.
During the morning, the local unit traded between a low of $US0.9377 and a high of $US0.9423.
The housing finance data came in well below expectations and pushed the Australian dollar below a key support level of $US0.9380, Easy Forex senior dealer Francisco Solar said today.
Australian housing finance commitments for owner-occupied housing fell 6.1 per cent in March, seasonally adjusted, to 59,371, the Australian Bureau of Statistics said today.
Total housing finance by value fell 5.3 per cent in March, seasonally adjusted, to $20.202 billion.
It was the second big fall in as many months, after housing finance declined 5.9 per cent in February, and well below the median market forecast of a 1 per cent fall.
The Australian dollar was trading at $US0.9405 just before the data was released at 11.30am AEST and fell to its intra-day low of $US0.9377 at 11.46am AEST.
“The numbers coming out of Australia, especially in that part of the economy, have just been disappointing,” Mr Solar said.
He said the data reinforced the view that the Reserve Bank of Australia (RBA) was now on hold, following the central bank’s quarterly statement on monetary policy released last Friday.
“The risk is there, but it looks like the market is pretty content that the RBA will just sit on the sidelines and be very much data dependent,” Mr Solar said.
“For the time being, there is no need to jump in to another rate hike.”
Mr Solar said a weak close to US equities on Friday night also dampened risk appetite for the high-yielding currency this morning.
Having fallen below $US0.9380, Mr Solar said the Australian dollar’s next support level was at $US0.9340. He said the unit would struggle to get above $US0.9410 during today’s local session.
