AUD/USD trades slightly lower after its first weekly drop in four weeks

Australian dollar traded slightly lower against its US counterpart on Monday, following its first weekly loss in four weeks, after prices of iron ore, Australias largest export, decreased last week. At the same time, prices of new homes in China, Australias largest export market, curbed their rate of increase in January.

AUD/USD touched a session low at 0.8938 at 2:10 GMT, after which consolidation followed at 0.8969, down 0.10% for the day. Last week the pair fell 0.63%, or the first loss since the week ended on January 24th. Support was likely to be found at February 13th low, 0.8928, while resistance was to be encountered at February 21st high, 0.9015.

Prices of iron ore declined to 122.40 USD per metric ton on Friday, marking their lowest level since February 13th, data compiled by The Steel Index Ltd. revealed. Total inventory of iron ore at ports in China, monitored by Shanghai Steelhome Information Technology Co., rose to 100.9 million tons during the week ended on February 21st, or the highest level since March 2010.

“At face value, it looks like it’s going to put downward pressure on iron prices, and it’s coming at a time when some other data are suggesting that the Chinese economy is slowing down,” said Greg Gibbs, a Singapore-based strategist at Royal Bank of Scotland Group Plc, cited by Bloomberg News. “The market should presume it’s a negative risk for iron ore prices and Australian dollar.”

Today the Chinese National Bureau of Statistics said that annualized new home prices in the country, based on the transactions involving conventional and conforming mortgages, climbed 9.6% in January, following a 9.9% gain a month ago. January was the first period during the past 14 months, that Chinas home values curbed their advance.

In monthly terms, home prices rose 0.4% in January, matching the rate of increase reported in December.

Prices of new homes in Shanghai rose at an annualized rate of 17.5% last month, in comparison with an 18.2% advance in December. Prices in Beijing recorded an annualized increase of 14.7% in January, compared with a 16% gain during the preceding month, according to data by the National Bureau of Statistics. However, Chinas home values are still at record high levels, which most ordinary citizens cannot afford.

The yield on Australian benchmark 10-year government bonds fell five basis points, or 0.05 percentage point, to reach 4.17%, which has been the most considerable drop since February 14th.

Meanwhile, in the United States, the number of existing homes sold dropped considerably in January, which implied that housing market was still experiencing the adverse influence of both high mortgage rates and severe weather conditions. According to data by the National Association of Realtor’s (NAR) released on Friday, existing home sales in the country decreased 5.1% in January compared to a month ago to reach the annualized 4.62 million units. The indicator recorded a fifth drop in the past six months, while at the same time home sales reached their lowest level in 18 months.

Experts had anticipated that existing home sales will fall less, to 4.68 million units in January, following 4.87 million homes sold in December. Analysts suggested that the combination of weaker supply and stronger demand in nation’s housing sector led to a jump in home values.

Elsewhere, the Aussie was little changed against the euro, with EUR/AUD cross dipping a mere 0.02% to trade at 1.5322 at 7:45 GMT. AUD/NZD was losing 0.09% on a daily basis to trade at 1.0830 at 7:46 GMT. The pair earlier touched a session low at 1.0818.