AUD/USD loses ground above 0.6500 ahead of Australian Building Permits data

The AUD/USD pair trades on a weaker note below the mid-0.6500s during the early Asian session on Monday. The pair loses traction despite the lower US Dollar (USD) and US yields. Investors await the release of Australian Gross Domestic Product (GDP) for the fourth quarter ahead of US Nonfarm Payrolls (NFP). AUD/USD currently trades near 0.6525, down 0.08% on the day. 

On Friday, the US ISM Manufacturing PMI came in weaker-than-expected, falling to 47.8 in February from 49.1 in January. The New Orders Index declined to contractionary territory at 49.2, while the Production Index decreased to 48.4, and the Employment Index was at 45.9. Furthermore, the University of Michigan Consumer Sentiment Index eased to 76.9 from 79.6. 

Atlanta Fed President Raphael Bostic said that he expected that the first cut in rates would be appropriate, probably at the end of this year at the earliest, as the Fed's preferred inflation gauge was continuing to ease. The financial markets have priced in the 70% odds that the Federal Reserve (Fed) will start cutting interest rates at the June meeting. 

On the other hand, the Australian Consumer Price Index (CPI) rose 3.4% in January, below the market consensus of 3.5%.  Australian inflation supported the case for the Reserve Bank of Australia (RBA) to begin cutting interest rates later this year. Apart from this, the Chinese Caixin Services PMI on Tuesday might influence market risk sentiment. The weaker-than-expected data could drag the Chinese-proxy Australian Dollar (AUD) lower and act as a headwind for the AUD/USD pair. 

The Australian Building Permits is due on Monday, and the Judo Bank Composite PMI for February will be released on Tuesday. The highlight this week will be the Australian GDP growth numbers for Q4 and the US Nonfarm Payrolls (NFP). These events could give a clear direction to the AUD/USD pair.