housing starts

House Price Pain to Weigh on the AUD/USD

Posted Friday, June 1, 2018 by
Rowan Crosby • 1 min read

The Australian economy is strongly tied to housing. House prices have been running higher for many years and in recent times we’ve seen big increases in prices in both Sydney and Melbourne. That now seems to be slowing down and it will be interesting to see how that impacts the AUD/USD.

The AUD/USD has been in freefall as the USD has really gained some strength in the recent weeks. A weak AUD can be a double-edged sword. It means that housing is cheaper for overseas investors, namely the Chinese, who have been buying up plenty of stock in Australia. However, a falling AUD means there are less inflows currently.

Overseas buying appears to have slowed recently and the most recent house price index from Core Logic also reflects a slowdown. Sydney has now fallen 4.1% over the last year while Melbourne travelling in line with inflation at 2.2% over the same period.

Data out of Australia and China has been mixed this week and we haven’t really seen much upside.


Technical Outlook

Price is still trapped in the downward channel and it can’t seem to break higher than the 0.7600 region. 0.7600 and 0.7500 which is an important round number level are still what I have my eye on.

I think if we break 0.7500 we will be sailing lower all the way to sub 0.7400. I’m still interested in selling around 0.7600 as I am bullish on the USD.

Of course, today we have US employment which will see some more volatility. And although the new tariffs imposed by the US could be a negative for the US. So far they have largely been shrugged off by the market.

AUD/USD – 240 min Chart.


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