Forex Investment and Currency Trading

March housing finance

The total number of loans to owner-occupiers fell by 6.1% in March, following a 6.8% drop in February. Prior to that housing finance was relatively resilient.
One word of caution - it is possible that weakness in March was exaggerated because of Easter. The ABS advise that they (attempt to) adjust for this effect.
The impression is that weakness in housing finance is genuine. There are a number of indicators pointing to a significant interest rate impact (eg retail sales, consumer confidence, auction clearance rates, dwelling approvals and house prices).
Australians are delaying moving into the housing market as significantly higher [...]

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Australia seems the better bet between Oz and New Zealand as in Australia you have a more hawkish central bank and early signs of a rekindling of the M&A boom after yesterday’s announcement of a A$13B AUD-positive M&A. The move lower in gold is not bullish Aussie, but on the other hand copper and the CRB are still very close to the all-time highs so the bloom is not yet off the commodity rose. Gold is $140 USD off the highs and Ozzie is still 0.9385 so you could argue it has held in very well. Some have begun to [...]

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NZ cash rates are a long way above real neutral

Reflecting increasing downside risk to activity stemming from a much weaker housing market, tighter credit conditions, and a deteriorating global growth backdrop, market brought forward the first rate cut to Q4 2008 from Q1 2009. An extra 50bp of easing next year is also expected, taking the cash rate to 6.25% by Q3 2009. In the face of continued above target inflation in 2008, 200bp of easing may look aggressive, but given that the real neutral cash rate is just above 5%, we would argue that such magnitude of easing is [...]

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In a relatively quiet week, all eyes will be on the Australian quarterly inflation numbers and the RBNZ decision.
Australia: In an otherwise quiet week finishing with the Anzac Day holiday, some of the suspense has been taken out of the quarterly CPI data on Wednesday because: (a) there is a pretty good forecast of the outcome from the monthly experimental inflation gauge; and (b) the RBA has already said: “CPI data for the March quarter…likely to show inflation of around 4 per cent … Underlying inflation … (is also) expected to rise.” That is, markets have already priced in a [...]

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