AUD/USD: Sidelined despite horrible Aussie Building Permits

The dismal Aussie Building Permits data released soon before press time fails to elicit a bearish reaction from the Aussie dollar, leaving AUD/USD sidelined near 0.7770. 

Approvals tanked 19.4% month-on-month in January – a big drop compared to the 3% contraction expected versus December's 10.9%.

Another data revealed Australia's Current Account surplus, or the difference between capital inflows and capital reduction, widened to A$ 14.5 billion in the fourth quarter, from the preceding quarter's A$ 10 billion, beating the forecast of A$13.1 billion. 

AUD/USD's sideways churn near 0.7770 indicates that both bulls and the bears are unwilling to lead the price action ahead of the Reserve Bank of Australia's (RBA) rate decision due at 3:30 GMT.

The central bank is expected to leave interest rates unchanged and express concerns regarding the recent rise in bond yields and the Aussie dollar's strength. 

"Just as rising yields threaten the recovery, so does a strong currency. AUD/USD hit a three-year high last week, and verbal intervention would be an easy way to halt the rise," BK Asset Management's Kathy Lien noted in her daily analysis. 

Australia's 10-year bond yield rose roughly 80 basis points to 1.91% in February, tracking the US yields higher. The surge in global government bond yields destabilized the equity markets last week, sending the dollar higher on Thursday and Friday. 

The RBA took on the bond markets on Monday, buying $4 billion worth of bonds, marking a big rise from the usual purchases worth $2 billion in a bid to stem the rally in yields. The 10-year yield fell by over 20 basis points on Monday. 

Technical levels