AUD/USD: Trading the Australian Building Jan 2015

Australian Buildings  Approvals measures the change in the number of new building approvals issued. It is one of the most important indicators of 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 00:30 GMT.

Indicator Background

Building Approvals is an important gauge of the construction industry and should be treated by traders as a market-mover.  The indicator tends to show strong fluctuations, leading to readings that are often well off the estimate.

The indicator bounced back in November, posting an excellent gain of 11.4%, easily beating the estimate of 5.2%. The markets are expecting a downturn in December, with an estimate of -2.7%.

Sentiments and levels

The Australian dollar  has plunged in the past two months, as the currency has surrendered over 600 points since the start of November. Still, the RBA wants to see a lower Aussie to help kick-start growth. With the Federal Reserve expected to raise rates in the first half of 2015, the Aussie is likely to lose more ground to the US dollar. Thus, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom:  0.8456, 0.8316,  0.8150, 0.8013, 0.7978 and 0.7904.

5 Scenarios

1. Within expectations: -3.0% to 0.0%. In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 0.1% to 0.5%: A reading in positive territory can send AUD/USD above one resistance line.
3. Well above expectations: Above 0.5%: Such an outcome could prop up the pair, and a second resistance line might be broken as a result.
4. Below expectations: -3.5% to -3.1%: A sharper decrease than forecast could cause the Aussie to  break below  one level of support.
5. Well below expectations: Below -3.5%: A  sharp contraction could  cause AUD/USD to break below  a second  support level.

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

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