Disappointing Construction Data
Early this morning, Australia released its Construction Work Done report for the last quarter of 2019 and it revealed a larger-than-expected contraction. According to the Australian Bureau of Statistics, the value of completed construction projects for the quarter declined by 3.0%. It was only expected to fall by 1.0%. Consequently, this report had a bearish effect on AUDUSD. The currency pair fell to an intraday low of 0.6587 shortly after the report was released. This is because the data is considered as a leading indicator of economic growth. With the coronavirus already sparking concern among policymakers, the data could give the RBA one more reason to be dovish in their upcoming meeting on March 3.
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Bearish Pennant on AUDUSD
AUDUSD has pared all of its losses brought about by the worse-than-expected report. This may have been brought about by the upward revision to the previous reading from -0.4% to 0.4%. However, AUDUSD remains to look bearish on the 4-hour time frame. Recently, the currency pair has been consolidating with in a downward slope. This follows after an abrupt drop. Consequently, a bearish pennant chart pattern has materialized.
In forex trading, it is considered as a bearish continuation pattern. A close below the recent lows at 0.6585 could mean that AUDUSD may soon fall to its February 2009 lows at 0.6255. On the other hand, a bullish close above this week’s highs at 0.6620 would invalidate this bearish signal. Instead, it could mean that AUDUSD may soon rally to test resistance around the 100 SMA at 0.6685.
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