The Australian dollar was already on the back foot due to the appreciation of the Chinese yuan seen lately and the risk off trades following the crisis in the Ukraine.
The latest disappointment from Capex cemented the loss of the battered 0.90 level. Can the pair go even lower?
Australia suffered a drop of 5.2% in Private Capital Expenditure in Q4 2013, more than 5 times the expectations for a moderate drop of 1%. To add insult to injury, this drop came on top of weaker growth in Q3 2013: 2.6% instead of 3.6% originally reported.
The Reserve Bank of Australia watches these figures closely, as investment has implications on the medium term, which is also the focus of the central bank. A previous domestic disappointment came from the weak employment data, that showed that Australia’s unemployment rate reached 6%.
AUD/USD
AUD/USD dropped around 40 pips in the immediate aftermath of the publication. After stabilizing, the pair resumed its drops in the following sessions, reaching a low of 0.8903.
At these levels, we are still far from the 0.85 level that RBA governor Glenn Stevens mentioned as an appropriate level.
Support is still at 0.8910, followed by 0.8820. Resistance remains at 0.90, followed by 0.9070. For more, see the AUDUSD forecast.
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