AUD/USD hovers around 0.7300 amid caution over Ukraine-Russia negotiations, mixed Australia data

• AUD/USD remains sidelined around seven-week high, recently easing towards daily low.
• Australia Building Permits slumped by 27.9%, Trade Balance rallied to 12891M during January.
• Increase in probabilities of 0.50% rate hike in March’s Fed meeting joins anxiety ahead of Kyiv-Moscow talks to test buyers.
• A long line of US data, Powell’s Testimony 2.0 will also be important for fresh impulse.

Mixed data from Australia adds barriers to the AUD/USD pair’s already lackluster moves during Thursday’s mid-Asian session. That said, the pair recently eased to 0.7290 but stays close to the highest levels since mid-January marked the previous day.

Australia’s Building Permits marked a notable downside with -27.9% figures for January, versus -3.5% expected and 8.2% prior. However, Trade Balance for the said month rose to 12891M compared to 9050M market consensus and 8356M prior. Details suggest that the Exports rose by 8.0% versus the previous growth of 1.0% whereas Imports shrank 2.0% versus the previous growth of 5.0%.

Read: Australian Trade Balance: AUD 12891m beats forecast 9050m, and previous 8,356m, AUD

Other than the data, the market’s mixed sentiment also restricts immediate moves of the AUD/USD pair. The reason could be linked to the cautious optimism from an anticipated round of peace talks between Russia and Ukraine, as well as hopes of faster economic recovery.

Also challenging the pair’s recent performance is the jump in the probabilities of a 0.50% rate hike in the March Fed meeting, per CME’s FedWatch Tool. That said, the CME’s tool signals around 90% probabilities over a 0.50% increase in the benchmark rate in March versus nearly 2% odds favoring the same decision the previous day. The latest jump in the market’s hopes of the hawkish Fed could be linked to Fed Chair Powell’s bi-annual hearing of Monetary Policy Report in front of the House Financial Services Committee.

Read: Powell Quick Analysis: US economy is on fire, war could impact policy both ways, dollar to rise

While portraying the mood, S&P 500 Futures print mild losses whereas the US 10-year Treasury yields also drop 1.2 basis points (bps) to 1.85% by the press time. Its worth noting that the benchmark T-bond coupons snapped a two-day downtrend and Wall Street also printed notable gains the previous day.

Having witnessed initial impacts of Aussie data, actually no major reaction, AUD/USD traders may wait for February’s China Caixin Services PMI, expected 53.0 versus 51.4, for immediate direction. Following that, US ISM Services PMI and Factory Orders for February, Q4 Nonfarm Productivity and second round of Fed Chair Powell’s testimony will be eyed for clear direction. Above all, headlines concerning Russia and Ukraine will be more important.

Technical analysis

AUD/USD remains sidelined between 0.7290-7310. Also acting as upside trading filters is January’s high near 0.7315. It’s worth noting that the pair’s bearish trend remains elusive until its stays beyond the 100-DMA level near 0.7235.