The Australian dollar faltered on Monday after dire home building data dealt another blow to the economic outlook and added more impetus to speculation about a cut in interest rates.
The Aussie dollar AUD=D3 eased slightly to $0.7242, and away from last week's two-month peak of $0.7295. It now has chart support in the $0.7220/30 area.
The New Zealand dollar was steadier at $0.6900 NZD=D3 , though again off last week's top of $0.6942. Support comes in around $0.6872. Turnover was light with China and much of Asia celebrating Lunar New Year this week.
The Aussie had to deal with more disappointing data as approvals to build new homes dived 8.4 percent in December, confounding forecasts of a 1.8 percent gain and a second month of outsized losses.
That took approvals to the lowest since mid-2013 and almost 40 percent below the cycle peak of November 2017.
Sliding home prices and tighter lending rules by banks looked to have hit the high-rise sector particularly hard.
It highlighted the stakes at play when the government releases the findings of a major inquiry into Australia's scandal-ridden banking system later on Monday.
"Approvals are now signalling an unambiguous further weakening that will clearly see declining new dwelling investment detract from Australia's growth in 2019," said Westpac senior economist Matthew Hassan.
He expects new dwelling investment to decline 8 percent this year, with a further 5 percent contraction in 2020.
That would be unwelcome news to the Reserve Bank of Australia (RBA) as it holds the first policy meeting of the year on Tuesday and is already expected to have to trim its upbeat forecasts for economic growth and inflation.
Figures on retail sales are also due on Tuesday and are forecast to show a drop of 0.1 percent in December, as consumers turned cautious after a spending big on online sales the previous month.
Futures markets
0#YIB: imply around a 50-50 chance the RBA will have to cut the 1.5 percent cash rate by the end of the year, despite its repeated assertions that the next move would be up.The data helped bonds pare some of the losses suffered in the wake of strong U.S. jobs numbers. The Australian three-year bond contract YTTc1 was just half a tick lower at 98.275, while the 10-year contract YTCc1 dipped 2 ticks to 97.7750.
