AUD/USD: Upbeat Australia Capex estimates fails to put a bid under the AUD

AUD/USD finds little love following the release of Australia's Q4 Capex data.
The headline number missed forecasts, however, estimates for 2020/21 bettered expectations.
The risk-off tone in the markets is likely capping the upside in the AUD.

AUD/USD is struggling to cheer the upbeat forward-looking Aussie private sector capital expenditure (Capex) data released at 00:30 GMT.

The seasonally adjusted estimate for total new capital expenditure fell by -2.8% in the December quarter 2019 compared to market expectations for 0.4% growth. December quarter's slide is preceded by a fall of -0.4% in the September quarter 2019, according to the Australian Bureau of Statistics (ABS).

AUD/USD fell from 0.6553 to 0.6545 in response to the weaker-than-expected headline number but quickly recovered to levels above 0.6550 on the back of the above-forecast forward-looking Capex figures.

Estimate 5 for 2019-20 came in at A$120,344 million – 2.1% higher than Estimate 5 for 2018-19 and 2.8% higher than Estimate 4 for 2019-20.

Estimate 5 for 2019/20 Capex was expected to print 1% higher than Estimate 5 a year ago (forecast $119bn), while Estimate 1 for 2020/21 was forecasted to be 2% higher than Estimate 1 a year ago (forecast $94bn).

So far, however, the upside has been capped around 0.6555, possibly due to risk-off tone in the financial markets. The futures on the S&P 500 are currently reporting a 0.35% drop on the day.

The US stocks fell for the third straight day on Wednesday with the Dow Jones Industrial Average falling by over 100 points. The flight to safety pushed the US Treasuries to record lows and WTI oil below $50.00. Also, the Aussie Construction Work Done data for the fourth quarter released Wednesday had disappointed expectations. As a result, AUD/USD fell from 0.6607 to a fresh 11-year low of 0.6542.

Technical levels

1. R3 0.6647
2. R2 0.6628
3. R1 0.659
PP 0.6571
1. S1 0.6533
2. S2 0.6514
3. S3 0.6476

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