AUD/USD flatlined near 0.7250 ahead of Australian data

• The AUD/USD pair trades little changed near the midpoint of the 0.72 handle in early Asian trading so far this Monday.
• The housing market indicator is likely to recover from -9.1% drop in November to +1.8% rise in December.

The AUD/USD pair trades little changed near the midpoint of the 0.72 handle in early Asian trading so far this Monday. The Aussie failed to take advantage of upbeat China’s Caixin Services PMI released over the weekend, as investors await the Australian monthly building permits.

The Chinese Caixin Services PMI beat 53.3 market consensus with 53.6 reading in January. December month building permits are expected to recover prior slump of -9.1% with +1.8% growth on M/M basis.

Headline inflation numbers released last week offered intermediate relief to Aussie bulls as it surpassed 1.7% forecast with 1.8% rise. The increase still remained under the lower end of the inflation target by the Reserve Bank of Australia (RBA). As result, clear direction on the RBA’s future policy moves is still absent.

“While economists and traders still see the benchmark rate staying at a record low 1.5 percent on Tuesday, market pricing of the chance of a cut within a year has jumped to about 70 percent in the two months since the central bank’s last board meeting -- when the probability was at zero,” reported by the Bloomberg news.

“RBA week and the first communication since glass-half-full Dec. After extending the record pause in the 1.5% cash rate, we hear the RBA’s take on recent market turmoil, Fed pause and outlook changes. GDP downgrade to 3% and unchanged inflation is most likely. The statement does not contain ‘next move is up’ policy bias, expect a repeat in Friday’s Statement on Monetary Policy,” says TD Securities.

Considering the November month plunge of -9.1%, likely recovery in the Australian building permits could offer intermediate relief to the Aussie buyers. It should also be noted that China is off for the whole week due to Lunar New Year holidays, which in-turn restricts directives for the AUD.

AUD/USD: Daily chart

Failure to surpass 200-day simple moving average (SMA) speaks louder for the AUD/USD weakness. The pair may revisit the 0.7220 and the 50% Fibonacci retracement of its recent downturn around 0.7200 during its further declines. Should the 0.7200 support fall short of holding the pair, the 0.7150 and an upward slanting support-line at 0.7110 may gain market attention.

On the upside, 200-day SMA level of 0.7295 and a medium-term descending trend-line, at 0.7310, seem nearby strong resistances for the pair. In case prices rally beyond 0.7310, the 0.7400 round-figure might lure the buyers.