When is Australia's Capex reading, and how could it affect the AUD/USD?

Aussie Capex Overview

Early Thursday at 00:30 GMT sees the quarterly reading of Australian Capex, or Private Capital Expenditure during the fourth quarter (Q4) of the year 2018. Private capital expenditure is a key reading to forecast the future moves of Reserve Bank of Australia (RBA) that has been dovish off-late. The AU Capex data gains more importance after Wednesday’s disappointment from quarterly growth of construction work done.

Analysts at ANZ say, “We are looking for Q4 CAPEX to be up 1.5% q/q, with risks to the downside. Any weakness will soften the growth outlook and lead to a rally in rates on growing expectations of a cut from the RBA.”

Additionally, Wespact says, “Westpac’s forecast is for a flat result with building and structures weighing on a likely modest uptick in equipment. Est 5 for 2018/19 capex plans may be a little less upbeat than est 4-on-4’s result of +4.4%. This release also brings the first estimate for 2019/20, and while there is always a great deal of uncertainty around this release, we may see a number in the region of $92bn which would be up 11% on estimate 1 a year ago.”

How could it affect the AUD/USD?

Considering recent downbeat sentiment at the RBA and sluggish print of construction work done, weakness in Capex could become additionally harmful for the AUD/USD pair that is struggling around 0.7140.

A slew of weak headline readings have already pushed the RBA to give even probabilities to its next move and further deterioration might add weakness into the central bank’s rate overview. As a result, the AUD/USD may decline heavily if there prevail a disappointment form the Capex outcome.

Technically, 0.7110 and 0.7070 are likely immediate supports for the AUD/USD pair during its decline towards 0.7050 and the 0.7000 round-figure. Alternatively, 0.7200 and 0.7235 can act as nearby resistances ahead of highlighting 0.7300 number to the north.

Key note

AUD/USD: Bears taking a breather at 50-D SMA, (ATR exhausted), ahead of key support and Aussie Capex

Australia: CAPEX plans to provide further guidance on growth prospects – Westpac

AUD/USD Technical Analysis: Aussie drops to daily lows near 0.7130 level

About the Aussie Capex

The Private Capital Expenditure released by the Australian Bureau of Statistics measures current and future capital expenditure intentions of the private sector. It is considered as an indicator for inflationary pressures. A high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).