Private Capital Expenditure knocked the Aussie (audusd) from its 4-week highs today as a reminder to traders all is not too rosey at home.
Yesterday was a good day for Aussie (audusd) bulls, as it broke to 4-week highs following China PMI data and a Dovish Yellen. Domestic data today acted as a reminder to Aussie bulls that the future may not be too bright.
With Capex contracting -2.2% it shows the outlook over the next 12-18 months could be bleak and again raises questions of a rate cut by RBA next week. However I am of the view that the RBA are not going to change their minds on a rate decision as quickly as the headlines in the media will between data releases.
Mining investment is likely to fall further looking at today’s numbers but this is not exactly new news and to a point is fully expected anyway.
Technically, as long as it can remain above 0.7848 support during the Asia session then there is chance of a rebound if CPI and employment data form US comes in soft. A break below 0.7848 deems yesterdays breakout as a ‘fakeout’ and is likely to test 0.78 this week. A close back within this range this week would start next week on the back foot. It may be able to find support from the shallow-angled bullish channel (blue) but it is likely to be a corrective channel at best, which would assume a break to multi-year lows at some point.