Talking Points:
- Australian home loans rose more weakly in July
- However other parts of the investment report were more hopeful
- Chinese inflation came in broadly as expected
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The Australian Dollar steadied Wednesday following the release of a mixed bag of local investment data and some broadly as-expected inflation numbers out of China.
Local home loans rose 0.5% on the month in July. This was notably worse than the 1.5% rise expected and may give the housing-focused Reserve Bank of Australia pause for thought. Owner-occupied loan value inched up by 0.3%, much worse than June’s 2.9% gain. However, investment lending rose 1.6% after a 1% fall in the month before.
Data released at the same time found Chinese consumer prices up 1.4% in July, just below the 1.5% rise expected. Food price inflation was weaker, with the bulk of the increase accounted for by non-food price rises. Producer prices meanwhile rose by 5.5%, again just below the 5.6% predicted.
This ‘steady as she goes’ report from China coupled with the hard-to-read domestic housing numbers saw AUD/USD essentially unchanged. The pair had been pressured earlier by weak Australian consumer confidence data and another Reserve Bank of Australia speaker worrying about the effects of a stronger Aussie in the local economy.
Aside from that RBA Deputy Governor Christopher Kent said Wednesday that the markets should be more worried about stretched household balance sheets than about absolute house price levels in Australia. He also said that the main worry concerning China was high debt levels, which may have taken some investor focus off inflation this morning.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
