AUD/USD: Trading the Australian August 2013

Australian Private Capital Expenditure measures the value of new capital expenditures made by private businesses. A reading which is higher than the forecast 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

Australian Private Capital Expenditure is released each quarter, which magnifies its impact. An increase in spending by businesses means that private companies are also hiring more workers, which is critical for economic growth.

The indicator has posted two consecutive declines, but the markets are expecting a turnaround in August, with an estimate of a modest 0.2% gain.

Sentiments and levels

AUD/USD had a disappointing week and the downward trend could continue. Many investors will be nervous after the RBA minutes indicated that the RBA wants to see the Australian dollar remain at low levels to help the economy. Meanwhile, the US Federal Reserve could taper QE as early as September and continuing speculation about when the Fed will pull the trigger has  boosted the US dollar. Thus, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.9180, 0.9041, 0.9000, 0.8893, 0.8747 and 0.8568.

5 Scenarios

1. Within expectations: 0.1% to 0.7%: In such a case, the AUS is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 0.8% to 1.1%: An unexpected higher reading can send AUD/USD well above one resistance line.
3. Well above expectations: Above 1.1%: Such an outcome would likely prop up the pair, and a second resistance line might be broken as a result.
4. Below expectations: -0.3% to 0.0%: A weak reading could cause the Aussie to drift and lose one level of support.
5. Well below expectations: Below -0.3%: In this scenario, AUD/USD will likely drop, possibly breaking a second support level.

For more about the Aussie, see the AUD to USD forecast.

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