AUD/USD: Trading the Australian Building July 2013

Australian Buildings indicator measures the change in the number of new building approvals issued. It is one of the most important indicators of 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 Tuesday at 1:30 GMT.

 Indicator Background

An increase in building approvals indicates an expansion of construction activity, which in turn is a critical component of economic growth. Conversely, negative readings indicates a contraction in building activity.

Building Approvals has  been fluctuating sharply. The indicator posted a 9.1% gain in May, but sagged in June with a decline of -1.1%. The markets are expecting the swings to continue, with an estimate of 2.2%. Will the indicator post a gain in the upcoming release?

Sentiments and levels

The US economy continues to look stronger than that of Australia, and the Aussie could slide if key Australian numbers do not meet expectations. Traders should be on alert for any hints about QE tapering from the Federal Reserve, which could bolster the US dollar. Thus, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.9549, 0.9428, 0.9283, 0.9180, 0.9041, and 0.90.

5 Scenarios

1. Within expectations: 0.0% to 4.0%: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 4.1% to 7.0%: An unexpected higher reading can send AUD/USD well above one resistance line.
3. Well above expectations: Above 7.0%: Such an outcome would prop up the pair, and a second resistance line might be broken as a result.
4. Below expectations: -3.0% to -0.1%: A reading in negative territory could cause the Aussie to lose ground and break one level of support.
5. Well below expectations: Below -3.1%: A very weak reading will likely cause AUD/USD to drop, possibly breaking a second support level.

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

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