The Australia dollar falls after weak March building approvals

The Australian dollar fell to a 5-month low after weak Australian building approvals were released on Friday.

Australian dollar price

AUD/USD sunk below $0.700 for the first time in 5 months, reaching to a low of $0.6985 after the release of Australia’s March building approvals.

March building approvals

March building approvals fell 15.5%, which was more than the expected number of 14%.

Private sector dwellings. excluding houses rose 0.38% in March, according to the latest figures by the Australian Bureau of Statistics (ABS)

The trend estimates for total dwellings approved fell 0.6% in March, while the seasonally adjusted estimate for private sector houses fell 3.2% in March, according to ABS figures.

The figures showed the trend estimates of the value of total building approved was flat in March, while the value of residential building rose 0.4%.

The seasonally adjusted estimate of the value of total building approved fell 14.4% in March. The value of residential building fell 17.6%, while the value of non-residential building fell 8.7%.

Market cautious ahead of RBA meeting

Weak March building approvals moved AUD/USD on Friday, but to some extend but what the market seems to be focusing on is Australia’s central bank decision on May 7, according to analysts.

The market is pricing in around a 40% chance of a rate cut to 1.25% according to analysts. It comes as the RBA has left the cash rate on hold at 1.50% since mid-August 2016 when it was cut by 25bps.

Analysts view that the market would be pricing in a greater chance of a 25bps easing on Tuesday, if it wasn't just ahead of the federal election on May 18.

However, the RBA has previously stated that the election cycle won't stop them from changing policy if needed.

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