Morning Briefing: US conditions could drive RBA move as dollar falls

US conditions could drive RBA move as dollar falls... Sydney rental market set to remain steady...

US conditions could drive RBA move as dollar falls
The apparent willingness of Federal Reserve officials to increase U.S. interest rates this year means incoming Reserve Bank of Australia (RBA) Governor Philip Lowe may have the ability to hold onto the policy ammunition that his predecessor bequeaths him.

Fed Chair Janet Yellen’s comments at the weekend that the case for an interest-rate hike has strengthened in recent months drove the Australian dollar down against the greenback as traders saw 65% odds that U.S. benchmark borrowing costs will be higher by year-end.

Some relief on the currency front could enable the RBA to hold fire on further reductions to a cash rate that it’s already been cut to a record-low 1.5%. The swaps market was pricing in just a 45% probability of a reduction in Australia by Dec. 31, according to data compiled by Bloomberg.

The Australian currency declined 0.8% last week, its first back-to-back weekly slide since May. It was at 75.54 U.S. cents as of 9 a.m. on Monday in Sydney, after reaching a three-month high of 77.56 earlier in August. Weaker-than-target inflation has already forced the RBA to lower its key rate by half a per cent this year, and the central bank has said that an appreciating exchange rate could “complicate’’ the economy’s shift toward growth drivers outside of the mining industry.

Sydney rental market set to remain steady
Conditions in Sydney’s rental market look likely to remain relatively constant as figures from the Real Estate Institute of New South Wales (REINSW) show July was a month of little change for the city.

According to the REINSW’s figures, Sydney’s vacancy rate remained at 1.9% during July, with only inner Sydney seeing any movement over the month.

“Both Middle and Outer Sydney rental availability was stable at 1.9 per cent, while Outer Sydney rose 0.1 per cent to 1.9 per cent,” REINSW deputy president Brett Hunter said.

“The Sydney market is experiencing conditions very similar to the previous month,” Hunter said.

(Your Investment Property)