AUD/USD: Trading the Australian Building Permits June 2013

Australian Buildings Approvals measures the change in the number of new building approvals issued. It is one of the most important indicators in the construction sector. A reading that is higher than the market prediction is bullish for the Australian dollar.

Here are all the details, and 5 possible outcomes for AUD/USD.

Published on Thursday at 1:30 GMT.

Indicator Background

Building Approvals provides a snapshot of activity in the construction sector, which is an important component of the economy.

The indicator tends to be erratic, making accurate predictions a tricky task. The indicator posted a gain of 9.1% last month, the best showing since July 2012. This was well above the estimate of 4.1%. However, the markets are bracing for a very weak release in July, with an estimate of -0.9%. Will the indicator surprise the markets with another strong reading?

Sentiments and levels

AUD/USD continues to be a tale of two currencies. The Aussie remains mired in a bad slump, while the  US dollar has been looking strong. Talk of tapering QE and strong US releases have bolstered the US dollar, and if Australian numbers don’t look sharp, we could see the Aussie continue to spin out of control. Thus, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.9428, 0.9283, 0.9171, 0.9041, 0.9000 and 0.8893.

5 Scenarios

1. Within expectations: 2.5% to 5.5%: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 5.5% to 8.5%: An unexpected higher reading can send AUD/USD well above one resistance line.
3. Well above expectations: Above 8.5%: Such an outcome would prop up the pair, and a second resistance line might be broken as a result.
4. Below expectations: -1.0% to 2.4%: A sharper decrease than forecast could push AUD/USD below one level of support.
5. Well below expectations: Below -1.0%: A reading deep in negative territory could cause AUD/USD to drop, possibly breaking a second support level.

For more about the Aussie, see the AUD/USD.

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