Tradervox (Dublin) – The AUD/USD cross has been experiencing a bearish movement following the recent risk aversion in the market. While risk aversion in the market might continue for some time as Europe struggles with the debt crisis, the cross bearish trend might be limited following some fundamental and technical indicators showing that the current drop is excessive.
Some of the positive events that have happened so far include the RBA Governor Stevens’ speech on Sunday which led to a great start for the Australian dollar and the HIA New Home Sales which was recommendable. The Retail Sales report which was released today minimized the effects of the Europe crisis prior to Italian auction.
The building approvals report which will be released on Thursday is expected to keep the Australian dollar strong against most of its peers, despite the risk aversion in the market. The release has been quite volatile in the past and might see the Aussie increasing or holding the dollar. The market is expecting an increase of 0.7 percent but any greater than this would lead to the AUD/USD rising. Another report that will be released at the same time as Building Approvals is the Private Capital Expenditure which fell 0.3 percent in the first quarter. However, the market is expecting a better reading of 4.1 percent.
The Private Sector Credit is another report that will be released on Thursday at 1:30 as the other two reports. The indicator tends to show less movement and is more accurate than most other indicators. The last two reports has indicated a moderate growth in new credit coming in at 0.4 percent both times. This time, the market expects a little change on the indicator. On this day, the AIG Manufacturing Index reading will be announced at 23:30 GMT. The index dropped sharply in April spiraling to 43.9 points which indicates contraction in the sector. A little improvement on this index is expected this time.
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