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  • The already weak AUD/JPY extended losses to fresh 5.5-week lows following the release of the weak Aussie data.
  • Australia’s building permits fell 15.5% month-on-month in March.

Australia’s March building approvals fell more-than-expected, sending the AUD/JPY pair down to 77.83 on Friday, the lowest level since March 25

The data released at 01:30 GMT showed the Building Permits fell 15.5% in March, almost reversing the 19.1% rise seen in February. The markets were expecting a drop of 14%.

The weaker-than-expected will likely strengthen the dovish RBA expectations. The central bank has, over the last few months, signaled readiness to cut rates, if required.

Most investment banks believe the rate cut may come through in the second half of this year. As of now, investors put the probability of a rate cut on Tuesday next week at 50-50. Many believe that the slowdown in the property market has created room for the RBA to deliver a pre-election rate cut.

The AUD, therefore, may remain under pressure ahead of the RBA decision, scheduled on Tuesday. The AUD/JPY cross is currently trading at 77.91, representing a 0.17% drop on the day.

More importantly, the flag breakout confirmed on May 1 indicates the path of least resistance is to the downside.

Technical Levels