Aussie Dips Despite Strong CAPEX
MarketPulse | Aug 26, 2021 06:35AM ET
The Australian dollar is in negative territory on Thursday. AUD/USD is currently trading at 0.7259, down 0.23% on the day.h2 CAPEX outperforms/h2
Australia Private Capital Expenditure came in at 4.4%, in the second quarter, which was a solid performance. The reading breezed past the consensus of 2.5% but eased compared to the Q1 gain of 6.0%. However, the positive data failed to cheer investors, as jitters over Covid concerns are weighing on the Australian currency on Thursday. This has snapped a three-day uptrend for the Aussie, as market sentiment has weakened.
Australia continues to grapple with a surge in Covid cases. New South Wales reported over 1000 new cases, a new record. The Delta Covid variant is exploding across the globe, which has put forecasts of a strong global recovery into doubt, and is weighing on minor currencies like the Australian dollar. Another factor which is putting pressure on the Aussie is cautious market sentiment ahead of the Jackson Hole Symposium, which takes place on Friday.
h2 Will he or won’t he?/h2Jerome Powell will be under a market microscope on Friday, when the Fed Chair delivers a highly-anticipated speech at the Jackson Hole Symposium. Just a few weeks ago, it was almost a given that a Fed taper was imminent, and that policy makers would provide a timeline for a tapering. However, the markets have since lowered expectations and are in a cautious mood ahead of the meeting. The FOMC minutes from the July meeting showed that most members are behind a tapering this year, but some want to wait until 2022. What Powell says (and doesn’t say) could have a significant impact on the movement of the US dollar – a hint of a timeline would be bullish for the US dollar, while a speech that steers clear of any insight into tapering could translate into disappointment and weigh on the US dollar.
h2 AUD/USD Technical/h2- There is resistance at 0.7306, followed by 0.7473
- On the downside, 0.7225, a monthly line, is providing weak support. Below, there is support at 0.7103, protecting the round number of 0.7100
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