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AUD/USD: Trading the Australian Private Capital Expenditure

Australian Private Capital Expenditure is released each quarter and should be treated as a market-mover. Here is the information about this event, and 5 possible outcomes for the Australian dollar.

Published on Thursday, at 00:30 GMT.

Indicator Background

Investments by factors in the private sector are a genuine gauge of economic activity over the quarter and indicate if the economy is heating or cooling. It also serves as an indicator of confidence – of how private investors feel confident about spending. The wide, quarterly, scope adds to the impact on currencies.

The indicator has struggled, with only one gain in the past 8 quarters. In Q3, the indicator dropped 4.0%, worse than the estimate of -2.8%. The markets are expecting a small decline of -0.4% in the Q4.

Sentiment and Levels

The US economy is firing on all cylinders, but Donald Trump’s theatrics and lack of an economic plan have led to  uneasiness in the markets. Trump’s protectionist stance could sour investors on risk and hurt the Australian dollar, as Australia is heavily dependent on its export sector. So, the sentiment is bearish towards this release.

Technical levels from top to bottom: 0.7938, 0.7835, 0.7691, 0.7513, 0.7427, and 0.7311.

5 Scenarios

  1. Within expectations: -0.8% to 0.0% In this case, AUD/USD fluctuates but is likely to remain within range and not make any breakouts.
  2. Above expectations: 0.1% to 0.6%: An unexpected higher reading can push the pair above one resistance line.
  3. Well above expectations: Above 0.6% :A surge in the reading would  push  the Aussie higher  and the pair could break a second line of  resistance as a result.
  4. Below expectations: -1.4% to -0.9%: In this scenario, AUD/USD could drop below one support level.
  5. Well below expectations: Below -0.6%:A very weak reading could hurt the Aussie, and the pair could fall below a second level of support.

For more about the Australian dollar, see the AUD/USD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.