AUD/USD: Better bid near 0.7225 ahead of key Australian data and RBA

• Soft housing market indicators and the USD recovery dragged AUD/USD to the low of 0.7210 on Monday.
• Aussie traders to eye on retail sales, trade balance and the RBA meet during early Tuesday Asian session.
• AUD/USD has 0.7135 as nearby support against the 0.7280 adjacent resistance.

AUD/USD extended its losses to under 0.7220 on Monday as sour Australian building approvals and a weeklong holiday at China weighed on the Aussie amid recovering US Dollar. The pair later on witnessed pullback towards 0.7225 before final hours to the Australian retail sales, trade balance and monetary policy meeting by the Reserve Bank of Australia (RBA).

December month Australian building permits slipped beneath market consensus of +1.8% to -8.4%. The housing market indicator dropped to downwardly revised -9.8% during the month of November 2018. In addition to soft data, the USD strength also dragged the pair downwards.

The USD stretched its Friday’s up-moves to the week start as welcome prints of the nonfarm payrolls (NFP) and optimistic comments from the US president Donald Trump about the US and China trade talk please greenback buyers.

During early Tuesday, the event releases from Australia are to kick start the day. Among them, December month retail sales and trade balance details are to initiate the Aussie volatility before RBA drives the market.

The Australian retail sales can deliver another blow to the Aussie as market expects a -0.1% contraction during the final month of 2018 against November month growth of +0.4%. The trade balance may try to recover some of the losses if matching expectations of 2,300M surplus compared to 1,925M registered prior month.

The RBA is set to hold its monetary policy unchanged with the cash rate at 1.5%. However, there are various points, like the global equity rally, slump in housing market at home, dovish Fed and falls in sentiment indices, which highlight the event’s importance.

“Markets are pricing about a 2/3 chance of a rate cut by year-end, even if few economists agree. Governor Lowe’s statement should at least confirm that Friday’s quarterly report will include lower GDP growth forecasts, after the Q3 disappointment, but overall the RBA seems likely to remain upbeat, forecasting growth around 3% this year and next. They should also stress the healthy jobs data,” says westpac IQ report.

AUD/USD Technical Levels

Technically, break of immediate ascending support-line drags the AUD/USD to 0.7200 whereas another trend-line support, at 0.7135 now, could restrict the pair’s near-term downside. In case prices drop under 0.7135, the 0.7070 and the 0.7015 may gain sellers’ attention.

On the flipside, the 0.7235 and the 0.7280 can act as adjacent resistances for the pair during its pullback. Should there be an additional upside past-0.7280, the 0.7350 and the 0.7390 resistances might flash on buyers’ radar.