Australia Home Loans Actual 0.2%, Expected 2.0% Previous 3.5%

Release Explanation: This report tracks developments in the number and value of outstanding home loans in Australia. “Home Loans are a measure of activity in the housing market and the figure acts as a gauge for consumer confidence, since consumers usually take out large loans only when they have sufficient saving or believe they will be able to pay them back in the future”, said Trade Team Members.

The sales of a new home usually trigger a sequence of consumption. “In addition to the high expenditure of the new home, buyers are likely to spend more money on furnishing and customizing their home”, the Team said. “Consequently, growth in the housing market spurs more consumption, generating demand for goods, services and the employees to provide them”. An increase in loans may forecast growth in the economy.

Trade Desk Thoughts: Home loans in Australia came in at 0.2 percent which was well below what analysts had forecast. In seasonally adjusted terms, dwelling finance commitments increased 2.5 percent while owner occupied housing and investment housing came in at 2.8 percent and -1.5 percent respectively.

Forex Technical Reaction: Surprisingly there was not much movement immediately after the release, considering the size of the miss and the impact it may have going forward. Trade Team Members said “The RBA lowered interest rates last night and Governor Stevens indicated the economy is facing a recession”. “Given this assessment and the fact that we have just entered the 2nd quarter earnings season, which could move equity markets lower, we are paying close attention the Aussie as the pair could move much lower tomorrow morning if Asian markets and U.S. futures continue to deteriorate” The Trade Team members said.