Starting the trading week to early gains, the US dollar further pares Friday’s losses against its Australian counterpart today. Thin trades are expected today on a quiet day for both corporate and economic releases. Though volumes are light with most Asian players out for the Chinese New Year holiday, the AUDUSD currency pair has been on a slide since exchanges started, favoring the Greenback.
Today, Federal Reserve Vice Chair Janet Yellen is scheduled to speak on the economy. She is set to deliver a speech titled “A Painfully Slow Recovery for America’s Workers: Causes, Implications, and the Federal Reserve’s Response” at the AFL-CIO, in Washington DC. The week expects speeches from other Fed officials likely to tackle their stance on the nation’s monetary policy.
Meanwhile, Australian home-loan approvals fell in December for a third month and the proportion to first-home buyers slumped to an eight-and-a-half year low as central bank interest-rate cuts failed to lure buyers into the market. According to the Australian Bureau of Statistics, the number of loans granted to build or buy houses and apartments declined 1.5 percent from November, when they dropped a revised 0.7 percent. The median estimate was for approvals to have improved by 0.1 percent.
Any easing in financial conditions will be welcomed by the Reserve Bank of Australia, which is counting on a revival in home building to help cushion the economy as a long boom in mining investment cools later this year. “The banks are not going to cut variable rates on their own. And first-home buyers need to know that rates are going to stay down for them to have the confidence to jump into the market,” said Brian Redican, a senior economist at Macquarie. Economic conditions are showing little impact on borrowing, as such the central bank struck an unusually mournful tone in its quarterly report card on the economy last week, lamenting the lack of life in investment spending outside mining.
The Greenback looks to capitalize on the woes of the Australian economy, suggesting a short position for the AUDUSD. It is still pertinent to look out for probable technical corrections on the currency pair’s movement.