By Lujia Lin, THE TAKEAWAY: Augusthome-loan approvals better than expected > Data has limitedimpact as markets focus on corporate earnings and Europe> Australian Dollar drops The Australian Dollar dropped nearly 20 pips immediately after data on August home loan approvals beat estimates. Markets largely shook off the news and the Aussie continued its drop versus the US Dollar amid a broader sell-off of Asian equities. Risk-assets in the Asia-Pacific market are under pressure after Alcoa’s earnings missed consensus estimates and concerns mount in Europe after the Slovak Parliament rejected an expansion of the EFSF. According to the Australian Bureau of Statistics, the total number of loans for construction and home-buying rose 1.2 percent month-over-month in August, compared to a revised 1.9 percent increase in July. Loans for new home purchases rose 6 percent after dropping in July, while refinancing loans rose 1.7 percent. On a value basis, refinancing loans rose 4.2 percent in August. The figures follow a string of data over the past couple of weeks pointing to improvement in the housing sector and in consumer sentiment. On Tuesday, the Westpac Consumer Confidence Index rose to a 4-month high, while data releases last week showed stronger-than-expected building approvals and retail sales. At the same time, the figures come as Australian government bonds continue their losing streak on reduced expectations that the Reserve Bank of Australia would cut rates amid stronger domestic conditions. Despite signs of improving conditions domestically, the Aussie will continue to be affected by developments in Europe and overall global risk sentiment. Thursday’s release of the unemployment rate and monthly employment change data will further weigh on the currency.
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