AUD/USD clings to 0.6990 ahead of Australia Building Permits, Trade Balance

• Absence of explicit bearish bias in the RBA’s rate statement added into the Antipodeans’ gains on the back of weak USD.
• Aussie traders remain cautious amid lack of developments concerning the US-China trade.
• Australia’s Building Permits and Trade Balance on the spotlight.

Having witnessed the RBA statement-led positive momentum gaining support from the weak US Dollar (USD), the AUD/USD pair trades modestly flat around 0.6990 during the early Asian session on Wednesday.

The Reserve Bank of Australia (RBA) matched wide market consensus of announcing a 0.25% rate cut to its benchmark Cash Rate. However, major attention was given to the lack of clear bearish bias in the rate statement.

Following the RBA announcement, the Governor Phillip Lowe was also on the wires while saying that the central bank remains “prepared to adjust interest rates again if needed”. Though, the Aussie buyers cared less for his measured comments.

Adding to the pair’s strength was the greenback’s overall weakness due to renewed trade tension, this time with the EU.

Investors now await Australia’s May month Building Permits and Trade Balance data for fresh impulse. It should also be noted that there has been silence at the US-China front that might push markets towards searching little information from there.

Market consensus indicates 0.0% Building Permits growth versus -4.7% prior and a 5,250 million Trade Balance surplus against 4,871 earlier.

ANZ is likely on the same line when it says:

The market pencils in a flat outcome for May Building Approvals, better than the 5% drop we are forecasting. Although this is a volatile series, we expect the market to look past a weak outcome as it covered the run up into the election. We are forecasting upside to the market's A$5.25b forecast for the May trade balance, anticipating a record surplus of A$6.3b, thanks largely to high volumes and multi-year highs in iron ore prices. This potentially could see Australia post its first current account surplus in nearly 50 years.

Technical Analysis

21-day exponential moving average (21-D EMA) level of 0.6960 acts as immediate support ahead of highlighting 0.6900 round-figure and June 18 top near 0.6880.

On the other hand, 0.7020 comprising 100-day EMA and a recent high near 0.7035 can limit the quote’s nearby upside, a break of which can push the bulls towards late-April highs surrounding 0.7070.