Home loans in Australia contracted in March, another sign that the nation’s housing market may be coming under additional pressure. Data from the Australian Bureau of Statistics showed loans fell 2.5%, much less than the +0.4% economists had forecast and a deterioration from the 0.8% expansion seen in February.
The Australian dollar was marked lower after the data, with AUD/USD dropping as much as 0.3% to 0.6972 while AUD/JPY slid 0.5% to 76.48. AUD/USD continues to hold above the 61.8% Fibonacci retracement of the January rally at 0.6940 as the FX pair consolidates below the key 0.70 handle.
AUD/USD Daily Chart
Three issues to overcome in trade deal
Local Chinese press reported at the weekend that negotiators are facing three hurdles for the conclusion of a trade deal between the US and China. The three obstacles are disagreement on the removal of ALL remaining tariffs, the matching of purchases and demand (China thinks US import targets are unrealistic) and differences over the wording of the final agreement.
In order tariff-related news, speculation is mounting that Presidents Trump and Xi will talk directly at the G-20 meeting scheduled to be held in Japan at the end of next month. Meanwhile, the White House has confirmed that China has invited Trade Representative Lighthizer and Treasury Secretary Mnuchin to China to continue talks, though no schedule has yet been fixed.
Equity indices traded in the red from the outset today, most giving back the surprising gains that were made on Friday when the additional tariffs were introduced. The hopes for the tête-à-tête between the two presidents possibly influencing the bullish tone. We have yet to hear China’s retaliatory response, which they have promised.
US indices Fell 1.0%-1.2%, matching the 1.2% decline of Chinese shares. The CN50 index is still holding above the convergence area of the 100-day moving average at 12,245 and the 50% retracement of the 2019 rally at 12,198.
China50 Daily Chart
Mid-month doldrums for the data calendar
There’s very little to report on the data front, with Japan’s leading and coincident indices for March pending followed by speeches from RBA’s Debelle, Fed’s Rosengren, Fed’s Clarida and the Bank of Canada’s Lane.
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/
Trade the Markets in May (video)
In this special one hour webinar Senior Market Analyst Craig Erlam in London and Senior Market Analyst Ed Moya in New York give an overview of all the main stories in financial markets right now and look ahead to the rest of May. They also give their analysis of the charts.
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