The Australian dollar is trying to hang on to some gains following some upbeat commentary from Reserve Bank of Australia Assistant Governor Philip Lowe on Wednesday.
Speaking at an event in Sydney today, the central banker said that the RBA needs to continue stimulating the supply side of the economy so as to allow domestic demand to progress without causing inflation, and that he expects the Australian economy to expand at above-average pace over the next few years, a development which would likely spur inflation and house prices.
He added that efforts by Chinese officials to tighten monetary policy are a positive development for the global economy, and that the strength of the economic rebound in Asia is surprising.
The comments suggest that more monetary policy tightening could be in the cards, as the central bank would seek to combat higher prices by raising interest rates. Indeed the central bank has hiked multiple times in recent months, with additional tightening already signaled to the markets.
On the data side, Westpac reported that its benchmark Australian consumer confidence index for the month of March advanced by 0.3 points to 117.3, a 0.2% month-over-month increase. In February, the index deteriorated by 2.6%.
The good news was later turned aside, however after home loans fell 7.9% month-over-month in January despite calls for a 2.0% increase.
December’s home loans, meanwhile, declined by 5.1%. Investment lending rose 0.9% compared to the prior 1.6% gain and the value of loans contracted by 5.0% month-over-month, adding to the prior 4.2% contraction.
In the aftermath of the announcements the Australian dollar finds itself higher by 10 pips at 0.9150 after trading in a range between 0.9163 to 0.9133. Short term resistance lies at 0.9243, and 0.9328, with support at 0.8979, 0.888 and then 0.8801.
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