AUD/USD: Trading the Australian Building Permits June 2013

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

Indicator Background

Building Approvals provides a  snapshot of  activity in the construction sector, which is an important component of  the economy.

The indicator tends to be erratic, making accurate predictions a tricky task. The indicator posted a gain of 9.1% last month, the best showing since July 2012. This was  well above the  estimate of 4.1%. However, the markets are bracing for a very weak release in July, with an estimate of -0.9%. Will the indicator surprise the markets with another strong reading?

Sentiments and levels

AUD/USD continues to be a tale of two currencies. The Aussie  remains  mired in a  bad slump,  while the  US  dollar has been looking strong.  Talk of tapering QE and strong US releases have bolstered the US dollar, and if Australian numbers  don’t look sharp, we could see the  Aussie continue to spin out of control. Thus, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.9428, 0.9283, 0.9171, 0.9041, 0.9000 and 0.8893.

5 Scenarios

1. Within expectations: 2.5% to 5.5%: In such a case,  AUD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 5.5% to 8.5%: An unexpected higher reading can send AUD/USD well above one resistance line.
3. Well above expectations: Above 8.5%: Such an outcome would prop up the pair, and a second resistance line might be broken as a result.
4. Below expectations: -1.0% to 2.4%: A sharper decrease than forecast could  push AUD/USD  below one level of support.
5. Well below expectations: Below -1.0%: A  reading deep in negative territory  could cause  AUD/USD to drop, possibly breaking a second  support level.

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

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