Aussie rebounds on poor US home sales data

With the Syrian chemical weapons crisis dragging on a little bit and a possible UN resolution not eventuating, currency markets took the opportunity have slightly less volatile US session in trading, in what has been a risk off week so far. The Australian dollar was able to recoup some of this week’s loss as softer than expected pending homes sales continued the theme of weaker US housing data from last week.

Pending Home Sales came in at -1.3% month on month and this was the trigger point for the Aussie to move from 89.00 up to 89.50 US cents. The Australian dollar also made ground on the Yen, up to highs of 87.5 Yen. This was matched by the US dollar which is back up at 97.7 Yen, but still down 150 pips from last week’s high.

 

Bank of England Governor Carney poured cold water on UK economy bulls, highlighting that the BOE is happy to add further stimulus if interest rate increases speculation gets out of hand. It has been a very positive last 3 months of economic data from the UK, and Carney just wants to put the brakes on over expectation that he feels is currently taking place. The pound responded in kind to his speech, down close to one cent to lows of 1.5448 USD before recouping all of the losses following the Pending Home Sales miss from the states.

 

This morning is the first time this week that we have economic data to guide trade through our local session. We have both monthly HIA New Home Sales and quarterly Private Capital Expenditure with both expected to increase. The data could likely push the Aussie to re-approach the 90 cent mark if we see both hit or outperform estimates with the US dollar still softer over the last 10 hours of trade.