AUD/NZD eyes more weakness below 1.1170 as focus shifts to RBA interest rate decision

• AUD/NZD is expected to display more downside below 1.1170 amid weaker Aussie Building Permits.
• Next week, an interest rate decision by the RBA will be keenly watched.
• The RBNZ will announce two more interest rate hikes this year.

The AUD/NZD pair has displayed a less-confident pullback after printing a fresh four-day low below 1.1700. The cross witnessed an intense sell-off on Tuesday after surrendering the crucial support of 1.1200. The asset is expected to display more weakness after slipping below the immediate support of 1.1170 as investors are turning cautious ahead of the interest rate decision by the Reserve Bank of Australia (RBA).

The aussie bulls weakened on Tuesday after the release of the downbeat Australian Building Permits data. The economic data landed at -25.9%, lower than the prior release of -17.2%. Also, the monthly data slipped dramatically to -17.2% vs. -0.6% recorded earlier.

On Tuesday, RBA policymakers will discuss over the decision of the fourth consecutive 50 basis points (bps) interest rate hike. Price pressures in the Australian economy have not displayed a sigh of relief yet. Currently, the Australian Consumer Price Index (CPI) is at 6.1%, recorded in the second quarter, and to scale it down more rate hikes are highly likely ahead. Apart from that, guidance from RBZ Governor Philip Lowe over the Official Cash Rate (OCR) will be of utmost importance.

On the NZ front, upbeat Building Permits data have supported the kiwi bulls. The economic data landed at 5%, significantly higher than the prior release of -2.2%. On a broader note, investors are still in a hangover after the announcement of two more interest rate hikes by the Reserve Bank of New Zealand (RBNZ) going forward this year. RBNZ Governor Adrian Orr announced at Jackson Hole Economic Symposium, last week, that the central bank is committed to cooling down the red-hot inflation and will announce a couple of more interest rates against the same.