Australian dollar falls on mixed US data

Oh yeeeeah, it’s a grand reversal today as data finally provides some sunshine. US new home sales in January (when everyone was supposed to be huddled up inside) blew away expectations (chart from Calculated Risk):

Sales of new single-family houses in January 2014 were at a seasonally adjusted annual rate of 468,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.6 percent above the revised December rate of 427,000 and is 2.2 percent above the January 2013 estimate of 458,000.

Consensus was for 400k so it’s a big beat. Other data was not so good. Indeed the leading indicator for housing was abysmal. MBA Mortgage Applications collapsed to 1995 levels (chart from CR):

 

Mortgage applications decreased 8.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 21, 2014.

…The Refinance Index decreased 11 percent from the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier to the lowest level since 1995.

…”Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it,” said Mike Fratantoni, MBA’s Chief Economist.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.53 percent, the highest rate since week ending January 17, 2014, from 4.50 percent, with points increasing to 0.31 from 0.26 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The divergence I described a few days ago has suddenly widened. Prices on existing homes are going to flatten out but new homes construction should keep on. The mix of effects on growth is ultimately restraining rather than contracting.

Markets were happy enough with that, anyway. The US dollar jumped by 30 points (helped along by Ukrainian tensions), the Australian dollar lost over half a cent and was down on most crosses as emerging market currencies took a pounding:

Stocks were flat but bonds were bid and yields fell one percent. Today it’s a dead heat for more tapering or not.