Housing loans make a comeback as dollar strengthens

Australia: 

The number of home loans for owner-occupiers rose a solid 2.9% in August, following a revised 0.3% decline in July. 

Loans in August were 8.8% higher than a year ago and continue to indicate healthy demand for housing. Since the end of April the value of loans to investors has fallen 4.4%. 

It is possible this decline is exaggerated with more new loans classified under owner occupation, as recently noted by the RBA.

Share Markets:

The US stockmarket made modest gains on Friday night ahead of a big week for financial sector earnings results.

The Dow rose 0.2%, the S&P 500 gained 0.1% and the Nasdaq was up 0.4% for the session.

Interest Rates:

US government bond yields edged lower at the long end with Fed officials expressing mixed views on the outlook for interest rates.

Foreign Exchange:

The US dollar index fell 0.5% on Friday amid uncertainty about the timing of a Fed rate hike.

The Euro strengthened, with EUR/USD rising from 1.1267 to a three-week high of 1.1387.

The Aussie dollar strengthened against the broadly weaker US dollar and against the other major currencies, with a slight lift in risk appetites and a rise in commodity prices supportive.

AUD/USD rose to a six-week high of 0.7344 and is currently trading around 0.7320.

The New Zealand dollar also gained ground, with NZD/USD rising from 0.6656 on Friday morning to 0.6722 and then consolidated. AUD/NZD rose from 1.0869 to 1.0973.

Commodities:

Commodity prices were generally stronger. OPEC Secretary-General El-Badri said he expects demand to grow and non-OPEC supply to contract, saying he expects to see "a more balanced oil market in 2016."

United Kingdom: 

The trade deficit narrowed to £3268mn in August, from a deficit of £4436mn in July. Goods exports rose 3.5%, while imports fell 0.7%.

United States:

Wholesale inventories rose 0.1% in August.

This followed a downwardly revised 0.3% in July (previously reported as -0.1%).

Wholesale sales fell 1.0% in August, with the weakness only partly due to softer food and oil prices.

The wholesale inventories to sales ratio rose to 1.31 months, the highest since 2009.

Import prices fell 0.1% in September, which was less weak than consensus expectations, although concerns about weak inflation remain.

It follows an upwardly revised decrease of 1.6% in import prices in August (previously reported as a 1.8% decrease).

For the year to September, import prices are down 10.7%, a pick up from the decline of 11.3% in the year to August.
Fed Vice-Chair Fischer said the US economy may be strong enough to warrant an increase in the Fed funds rate this year.

He noted the low US unemployment rate (5.1%) doesn't fully reflect "additional forms of slack in the labour market". He said the impact of oil prices and the US dollar on inflation were "transitory".

Chicago Fed President Evans (a dove) favoured keeping the policy rate below 1.0% throughout 2016, adding he wasn't confident inflation would reach its target within a reasonable timeframe.

New York Fed President Dudley thought the economy had weakened slightly, with sub-target inflation arguing for a delay in tightening.



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