Australian building approvals unexpectedly rose in February, but the data followed four consecutive monthly falls and did little to alter expectations that the country's central bank will sit pat on rates next week.
February building approvals rose a seasonally adjusted 3.2 percent in data released on Tuesday, compared with a forecast 3.3 percent decline. Still, private sector housing approvals fell for a fifth month, down 3.1 percent in February.
"Despite the headline number, the trend is still down and consistent with a softening housing market. It doesn't change the implication for monetary policy, which will be on hold next week, but the tightening bias will remain," said Su-Lin Ong, senior economist at RBC.
The Australian Bureau of Statistics also released the trade balance of good and services for February. The trade deficit narrowed to a seasonally adjusted A$1.72 billion deficit, compared with an expected A$1.5 billion shortfall and a revised A$1.87 billion in January.
Imports and exports both fell four percent.
The RBA meets for its monthly board meeting next Tuesday, but a Reuters poll of 21 economists found just one expected a rate rise in April.
The majority expected a tightening some time over the remainder of the year, while six expected no rate hike in 2004.
The RBA hiked the cash rate in November and December last year, taking it 5.25 percent, one of the highest rates in the industrialised world, in an attempt to curb ballooning household debt against the backdrop of a prolonged housing boom.
However, the housing sector is now showing clear signs of cooling and home lending is expected to retreat to more sustainable levels. Bank bill futures were little changed on the data. The June contract implies a yield of 21 basis points over the 5.25 percent cash rate. The Reserve Bank lifted rates twice in the fourth quarter of last year.
The Australian dollar briefly ticked above 75 US cents on the improved trade position.
The Aussie hit a seven-year high of 80.05 cents in February, helped by its large interest rate differential with the key interest rate in the United States at just one percent.
The AUD's strength had helped to fuel domestic demand through cheaper imports, but proved something of a restraint for the export market and has slowed the recovery in Australia's trade position to a more even keel after last year's devastating drought.
"Even though our trading partners are growing much more strongly I think the currency is still a slight negative for our competitiveness," said Kieran Davies, chief economist at ABN Amro.