Australian Dollar US Dollar (AUD/USD) Exchange Rate Rise on Surprise Jump in Aussie Home Loans
The Australian Dollar US Dollar (AUD/USD) exchange rate rose today and the pairing is currently trading at an inter-bank rate of $0.7150 after the Australian Bureau of Statistics revealed that home loans rebounded in February.
This is a rare positive sign for the country’s subdued property market which has led some economists to speculate housing price declines have found a bottom.
Home loans rose by 2% in February after having contracted on a monthly basis since October 2018.
Loans to owner-occupiers rose by 3.4%, the first rise since October and the largest rise since August 2015.
Commenting on the data, Westpac Economist Matthew Hassan said:
‘Overall, the February update was firmer than expected, consistent with the improved tone from auction market activity and a slowing in price declines in recent months.
‘Some of the effects of tightening credit conditions may also be dissipating.
‘That said, the signs of improvement are still only tentative. The market may be starting to find a base in terms of finance activity but conditions remain weak overall.’
Australian Dollar (AUD) Rallies as Iron Ore Surges to Five-Year High
On Monday iron ore prices surged to multi-year highs, buoying the Australian Dollar (AUD) against the US Dollar (USD).
Stronger steel prices and continued speculation over supply disruptions in Australia and Brazil are likely the main catalysts behind the latest increase in buying.
Analysts at the Commonwealth Bank expect the recent price gains will be sustained, and commenting on this Vivek Dhar, the bank’s Mining and Energy Commodities Analyst said:
‘We expect iron ore prices to [hold] above $90 a tonne in the short term as physical markets tighten since the disruption to Vale’s iron ore exports is only now being felt by importers.
‘Once China’s supply and demand responses are taken into account, cost curves suggest that prices will settle closer to $85 a tonne by the end of the year.’
US Dollar (USD) Slides as US Factory Orders Decline
On Monday, the US Commerce Department revealed that US factory orders fell modestly by -0.5%, with January’s data revised down to show orders were unchanged at 0%.
Manufacturing, which accounts for around 12% of the US economy, is losing momentum as stimulus from a $1.5 trillion tax cut package fades.
It is also likely that activity has been dented by the trade dispute between the US and China as well as the global economic slowdown, which is affecting exports.
However, the data did show that shipments of finished goods rose after four consecutive months of the figure suffering from declines.
Australian Dollar US Dollar Outlook: AUD/USD to Rise on Falling Aussie Consumer Confidence?
Looking ahead to the start of Wednesday’s session, the Australian Dollar (AUD) could slide against the US Dollar (USD) following the release of Westpac’s latest consumer confidence index.
If consumer confidence slides once again in April, sentiment in the ‘Aussie’ could be hit.
This afternoon the ‘Greenback’ could rise following the release of the US Consumer Price Index (CPI).
If CPI excluding food and energy rises in March, it could cause the Australian Dollar US Dollar (AUD/USD) exchange rate to fall.