The AUD/USD shed 0.46% to trade at 1.0156, down from a session high of 1.0206, and up from a session low of 1.0156. Support was likely to be found at 0.9700, the low from May 2012, while resistance could be found at 1.0553, the high from January 6. The Aussie has been weakening against its USD since the beginning of January. Now, its trading near a level not seen since last May. Data on Australian building approvals showed that construction in the Australian economy might be declining. On month-over-month basis, Australian building approvals dropped 2.4% — much worse than the gain of 2.8% that was anticipated. With building permits down in Australia, the construction sector of the Australian economy may be weakening. If the Australian economy as a whole is showing signs of distress, Australia’s dollar should weaken. The Reserve Bank of Australia will release its interest rate decision Tuesday. Economists expect the RBA to keep interest rates unchanged at 3.00%. Should the RBA cut rates, traders might expect the AUD/USD to fall further. However, if the RBA raises rates, the AUD/USD might rally. Before that decision, investors will also get data on the state of Australian retail sales. On a month-over-month basis, retail sales are expected to rise 0.4%. Chinese data can also weigh on the Australian dollar, as a significant portion of Australia’s exports go to China. HSBC’s Chinese services PMI will be released early Tuesday. For its part, the U.S. dollar has seen little economic data that would affect its trading position. The most important U.S. data is set to come out at the end of the week. The nonfarm payroll report, which shows the state of the job market, will be released Friday morning.
EasyForexNews Research Team