Dollar falls as housing data disappoints

THE Australian dollar is one US cent weaker as disappointing housing data convinces traders another interest rate cut is coming in July.

Dollar falls as housing data disappoints

THE Australian dollar is one US cent weaker as disappointing housing data convinces traders another interest rate cut is coming in July.

At 12pm AEST today, the local unit was trading at 94.04 US cents, down from 95.04 cents on Friday.

The currency briefly hit 93.90 US cents in late morning trade, for the first time since August 2010, after official data showed new home loans numbers rising by just 0.8 per cent in April.

The figure was well below economists' forecasts of a two per cent increase.

Commonwealth Bank currency strategist Joseph Capurso said the weaker than expected housing numbers convinced traders a July rate cut was more likely.

"The housing part of the economy is very interest rate sensitive," he said.

"It's one of those bits that are going to make up for (flagging) mining investment, so it's disappointing that housing underperformed yet again."

Financial markets are now pricing in a 50 basis point rate cut in July, which would take the cash rate to a new record low of 2.25 per cent.

"I've got a 50 per cent chance of a cut next month ... that's putting the Aussie under pressure," Mr Capurso said, adding the Australian dollar's 0.2 US cent fall after 11.30am AEST was attributable to the housing numbers.

Meanwhile, Australian bonds were weaker.

At 12pm AEST today, the June 10-year bond futures contract was trading at 96.605 (implying a yield of 3.395 per cent), down from 96.745 (3.255 per cent) on Friday.

The June three-year bond futures contract was at 97.445 (2.555 per cent), down from 97.530 (2.470 per cent).

Australian markets were closed yesterday for the Queen's birthday public holiday.

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