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US MBA Mortgage Approvals Neutral To Soft

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The US Mortgage Bankers Association (MBA) has just released updated mortgage application figures. The data is somewhat disappointing at -2.1% particularly when compared to the last reported figure of 9.4% growth in applications.

This MBA Mortgage Application data is a leading indicator for the US housing market and a downward trend such as this is naturally a bearish sign for the US economy. The truth however is that this figure contains a lot of volatility and it is not unusual for it to swing like this in the short term, in fact historical swings have tended to be higher so the slight nature of this negative posting will not be taken as to detrimental.

This is particularly the case following last week’s positive Non Farm Payroll data and provides some further confirmation of stability in the world’s largest economy. It is also setting the tone for the remainder of this week which sees a large amount of US data being released including trade, retail sales and producer price figures but most importantly the Michigan Consumer Sentiment Index on Friday.

The US economy has kept commentators guessing as of late, after a strong start to the year data readings have been poor over the course of the last two months. This has prompted the Federal Reserve to create some wiggle room for itself with regard to the promised tightening of monetary policy. Optimism remains, however it is now of the more cautious variety. The markets will be looking to the current tranche of data for signs that the slower than anticipated quarter to date is in fact not representative of the overall trend in the US recovery.

In this regard, a few positive prints later in the week should be enough to pull the Dollar out of it’s slide. With the exception of some safe haven buying during the height of the Ukrainian tensions the Dollar Index has been languishing sub 80 in recent weeks and threatening to go lower. This feels a little unnatural given the robustness of the US recovery, it is therefore likely that the Dollar will have it’s day once we begin to see solid confirmation of US economic strength.

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