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$A falls on RBA’s house market warning

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The Australian dollar has fallen to a three week low below 76 US cents after the Reserve Bank warned of the economic risks posed by rising household debt.

The RBA kept the cash rate on hold as expected, but governor Philip Lowe’s comments about soaring housing prices pushing up the household debt to income ratio weighed on the Australian dollar.

After hitting a high of 76.15 US cents following the release of better than expected February trade data on Tuesday morning, the currency fell to 75.78 US cents when the RBA’s statement was published.

The Australian dollar was worth 75.68 US cents at 1700 AEST.

EasyMarkets currency dealer Paul Clifford said the Australian dollar fell because the RBA had highlighted housing market risks, lower inflation and growth concerns in China.

“Those three things have weighed on the currency and while the move has not been enormous, it certainly sets the tone for the rest of the week, partly because Donald Trump and Chinese leaders will be meeting Thursday and Friday to discuss trade,” Mr Clifford said.

A global risk-off environment pulled the share market slightly lower.

Gold miners were the exception to widespread weakness, as investors turned to gold and other safer assets.

President Trump’s meeting with Chinese President Xi Jinping’s later this week and key jobs data from the US have all created uncertainty, Patersons Securities economist Tony Farnham said.

Doubts about President Trump delivering on his pro-business economic stimulus plans, plus his protectionist stance on trade, also continue to worry investors, he said.

Newcrest Mining shares gained 3.5 per cent to $23.46, OceanaGold added 4.7 per cent to $4.03 and Evolution Mining was 3.8 per cent stronger at $2.21.

BHP Billiton dropped 0.3 per cent, Rio Tinto fell 0.2 per cent and Fortescue Metals was 1.6 per cent weaker.

All four major banks lost ground, with Westpac the worst performer, losing one per cent, while Telstra dropped 0.6 per cent.

ON THE ASX:

* The benchmark S&P/ASX200 dropped 16.1 points, or 0.27 per cent, to 5,856.6 points.

* The broader All Ordinaries index dropped 13.9 points, or 0.24 per cent, to 5,895.8 points.

* The June SPI200 futures contract was down 20 points, or 0.34 per cent, at 5,839 points.

* National turnover was 2.1 billion securities traded worth $4.5 billion.

CURRENCY SNAPSHOT AT 1700 AEDT:

One Australian dollar buys:

* 75.68 US cents, from 76.06 US cents on Monday

* 83.60 Japanese yen, from 84.82 yen

* 71.01 euro cents, from 71.28 cents

* 60.87 British pence, from 60.69 pence

* 108.40 New Zealand cents, from 108.82 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,257.30 per fine ounce, up $US10.60 from $US1,246.70 on Monday.

BOND SNAPSHOT AT 1630 AEDT:

* CGS 5.25 per cent March 2019, 1.708pct, from 1.7420pct

* CGS 4.25pct April 2026, 2.549pct, from 2.6230pct

Sydney Futures Exchange prices:

* June 2017 10-year bond futures contract at 97.36 (implying a yield of 2.64pct), from 97.29 (2.71pct) on Monday

* June 2017 3-year bond futures contract at 98.11 (1.89pct), from 98.07 (1.93pct).

(*Currency closes taken at 1700 AEDT previous local session, bond market closes taken at 1630 AEDT previous local session)