AUD/USD: Better-than-expected Aussie Capex data fails to entice buyers
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- AUD/USD remains sidelined below 007240 after Aussie business spending data.
- Capex fell by 5.9% in the second quarter versus expectations for an 8.4% decline.
- Traders sit on the fence ahead of the Jackson Hole Symposium.
A better-than-expected Aussie business spending data released a few minutes before press time is struggling to put a bid under the Aussie dollar.
While business spending, as represented by private capital expenditure (CAPEX), fell 5.9% in the second quarter, the actual reading was better than the forecasted drop of 8.4%. The third estimate for 3 for 2020-21 came in at $98,624 million – 12.6% lower than the third estimate for 2019-20. However, the third estimate is 8.9% higher than the second estimate of 2020-21.
AUD/USD jumped 10 pips to 0.7245 immediately following the release only to fall back below 0.7245. The currency pair is now trading largely unchained on the day. The capex data has come a day after Australia reported a 0.7% decline in the construction work done – also a key component of the gross domestic product.
The lackluster reaction from the Aussie dollar could be attributed to caution ahead of Thursday’s Jackson Hole Symposium, where Federal Reserve’s chairman Jerome Powell is expected to signal tolerance for higher inflation. With the dovish expectations built in, the scope for disappointment is quite high.
Also, capping the upside could be the latest allegation that the two-man team sent by the World Health Organization to China to investigate the origin of the coronavirus did not reach Wuhan, the epicenter of the virus outbreak. Further, the relationship between the US and China remains strained despite both sides agreeing to work towards implementation of the phase one trade deal earlier this week.
Technical levels
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