- AUD/USD recovers from 0.6612 to 0.6630 and remains bid despite dismal Aussie Capex data
- Uptick in stocks and comments by RBA’s Lowe look to be supporting the AUD.
AUD/USD’s recovery from session lows looks set to continue despite Australia’s reporting a decline in the Private New Capital Expenditure plans for 2020/21.
The currency pair is currently trading at 0.6630, having risen from 0.6612 ahead of the data relesed at 01:30 GMT.
“Total new capital expenditure fell by -1.6% in the March quarter 2020. This follows a fall of -2.6% in the December quarter 2019,” the australian Bureau of Statistics (ABS) report said. While the pace of decline slowed in the first quarter, the data has so far failed to provide any boost. Moreover, markets are more concerned about the economic slowdown caused by the coronavirus-induced locdown initiated in April.
The forward-looking metrics are painting a negative picture and likely capping the upside in the AUD. For instance, the second CAPEX estimate for 2020-21 came in at $90,891 million – down 7.9% lfrom the second estimate for for 2019-20 and 8.8% lower than the first estimate for 2020/21.
Looking ahead, the currency pair could set new session highs, as Asian shares and US stock futures are flashing green on growing optimism about economic recovery from the coronavirus pandemic. Also, Reserve Bank of Australiia’s governor was out on the wires earlier today, stating that the jobless rate may not rise as high as previously expected and the stimulus package announced in March is having a desired result.
While the uptick in stocks and positive comments from RBA’s Lowe favor further gains in the Aussie dollar, the escalating tensions between the US and China and the resulting yuan slide pose downside risks. The Chinese yuan fell to an eight-month low of 7.1766 on Wednesday.
Technical levels
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