Australia Q4 Construction Work Sinks 3.1% On Quarter

The value of construction work completed in Australia was down a seasonally adjusted 3.1 percent on quarter in the fourth quarter of 2018, the Australian Bureau of Statistics said on Wednesday – coming in at A$51.092 billion.

That missed forecasts for an increase of 0.5 percent following the 2.8 percent decline in the three months prior.

The seasonally adjusted estimate of total building work done fell 1.7 percent to A$29.599 billion in the December quarter, while the estimate for engineering work done dropped 5.0 percent to A$21.492 billion.

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Economic News

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Goldman Sachs: Global economy may have bottomed – Bloomberg

The global economy may have bottomed out already and sequential growth will likely pick up from here, according to Goldman Sachs Group Inc, Chief Economist Jan Hatzius. 

While growth remains soft, Goldman’s current activity indicator in February is slightly above the downwardly revised December and January numbers. 

Key points

Positive on risk assets but upside probably lower now.

Retain bearish view on the USD, courtesy of dovish Fed.

Tentative positive signs of a turn around for China growth, Europe remains the weakest region. 

Lower change of a Fed move in the next 6 to 9 months. 

USD/CHF Technical Analysis: Buyers keep lurking around 0.9985-80

USD/CHF daily chart

  • USD/CHF trades near 0.9995 during early Asian sessions on Wednesday.
  • The pair repeatedly refrains from declining below 0.9985-80 support-line connecting recent lows to the highs marked during early December and January.
  • With the frequent bounce off 0.9985-80, chances of the pair rise towards 1.0060 are much brighter on the successful break of 1.0025 nearby resistance.
  • During the pair’s rise past-1.0060, 1.0100 and 1.0125 may gain buyers’ attention
  • If at all the pair slips under 0.9980, 0.9950 and 200-day simple moving average (SMA) at 0.9910 can act as immediate supports.
  • Additionally, 0.9845, 0.9800 and an upward sloping support-line joining lows marked during a year’s time at 0.9780 can try limiting the pair’s declines after 0.9910.

USD/CHF 4-Hour chart

  • In order to validate the pair’s slide under 200-day SMA, 50% Fibonacci retracement of January-February upside, at 0.9905, becomes necessary.
  • Also, 1.0080 can act as a buffer during the pair’s rise towards 1.0100 and after crossing 1.0060 resistance.

USD/CHF hourly chart

  • On the H1 chart, 0.9990 seems adjacent support before requiring the pair to slip beneath 0.9980 in order to aim for 61.8% Fibonacci expansion (FE) of its moves since mid-February, at 0.9960.
  • Also, 1.0010 may try challenging short-term buyers ahead of offering them the 1.0025 and the 1.0060 levels to cherish.

NZD/JPY Technical Analysis: Above 76.4% fibo, Bulls will look to a break …

  • NZD/JPY pressures the upside while trading above the 21-D SMA.
  • Alligator MAs are bullish around the 4hr pivot point. 
  • A break of fractal swing high located at 76.54 with the confluence of the 76.4% fibo of the Dec 2018 downtrend to flash crash lows opens a run to 77 the figure confluence with R2 – (76.99 will meet the 9th Dec lows).
  • However, MACD is turning negative and on the flip side, a break of the 21-D SMA opens risk to S3 at 75.25.

 

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

Asia Pacific Market Open Talking Points

  • GBP rally accelerates as chances of a ‘no-deal’’ Brexit fade
  • US equities struggled rallying again on supportive news flow
  • S&P 500 futures suggest APAC stocks may fall as Yen gains

See our study on the history of trade wars to learn how it might influence financial markets!

The British Pound continued rallying against its major counterparts throughout Tuesday’s session, building on expectations that a ‘no-deal’ Brexit might be avoided. It began early in the day on reports UK Prime Minister Theresa May could delay the divorce. Then, gains in Sterling were amplified after UK lawmakers were reportedly planning a second referendum as a proposal during Wednesday’s amendment debate in Parliament.

GBP/AUD Technical Analysis

GBP/AUD climbed about 2.4% since I warned about an impending resistance break about two weeks ago. Prices are sitting on the outer boundaries of next major resistance between 1.8508 and 1.8434. Negative RSI divergence warns that upside momentum is fading. While that may precede a turn lower in the interim, confirming a close under the rising trend line from December could signal a more lasting reversal.

GBP/AUD Daily Chart

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

Chart Created in TradingView

Wall Street had a volatile session as towards the end of the day, the S&P 500 trimmed intra-day gains to end almost 0.1% lower as expected. The index initially got a boost when Fed Chair Jerome Powell testified before Congress and reiterated a patient forecast on rates. Shortly after, better-than-expected US consumer confidence data helped contribute to this. But this optimism didn’t last, similar to the lack of follow through on upbeat US-China trade news.

Traders ought to proceed with caution as this could signal weakness in the underlying asset if it struggles rallying on supposedly supportive news. With that in mind, S&P 500 futures are pointing lower as Wednesday’s Asia Pacific trading session gets underway. The ASX 200 looks particularly vulnerable after its worst day since January. Declines in equities may boost the anti-risk Japanese Yen. Meanwhile, a wildcard could be the second Summit between US President Donald Trump and North Korea’s Leader Kim Jong Un.

US Trading Session Economic Events

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

Asia Pacific Trading Session Economic Events

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

** All times listed in GMT. See the full economic calendar here

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

Asia Pacific Market Open Talking Points

  • GBP rally accelerates as chances of a ‘no-deal’’ Brexit fade
  • US equities struggled rallying again on supportive news flow
  • S&P 500 futures suggest APAC stocks may fall as Yen gains

See our study on the history of trade wars to learn how it might influence financial markets!

The British Pound continued rallying against its major counterparts throughout Tuesday’s session, building on expectations that a ‘no-deal’ Brexit might be avoided. It began early in the day on reports UK Prime Minister Theresa May could delay the divorce. Then, gains in Sterling were amplified after UK lawmakers were reportedly planning a second referendum as a proposal during Wednesday’s amendment debate in Parliament.

GBP/AUD Technical Analysis

GBP/AUD climbed about 2.4% since I warned about an impending resistance break about two weeks ago. Prices are sitting on the outer boundaries of next major resistance between 1.8508 and 1.8434. Negative RSI divergence warns that upside momentum is fading. While that may precede a turn lower in the interim, confirming a close under the rising trend line from December could signal a more lasting reversal.

GBP/AUD Daily Chart

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

Chart Created in TradingView

Wall Street had a volatile session as towards the end of the day, the S&P 500 trimmed intra-day gains to end almost 0.1% lower as expected. The index initially got a boost when Fed Chair Jerome Powell testified before Congress and reiterated a patient forecast on rates. Shortly after, better-than-expected US consumer confidence data helped contribute to this. But this optimism didn’t last, similar to the lack of follow through on upbeat US-China trade news.

Traders ought to proceed with caution as this could signal weakness in the underlying asset if it struggles rallying on supposedly supportive news. With that in mind, S&P 500 futures are pointing lower as Wednesday’s Asia Pacific trading session gets underway. The ASX 200 looks particularly vulnerable after its worst day since January. Declines in equities may boost the anti-risk Japanese Yen. Meanwhile, a wildcard could be the second Summit between US President Donald Trump and North Korea’s Leader Kim Jong Un.

US Trading Session Economic Events

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

Asia Pacific Trading Session Economic Events

Brexit Latest Bolsters British Pound, S&P 500 Looking More Weak

** All times listed in GMT. See the full economic calendar here

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

USDCAD: Implied Volatility Depressed Despite Upcoming Event Risks

USDCAD Implied Volatility – Talking Points:

  • USDCAD 1-week implied volatility seems subdued as currency option traders expect muted price action
  • Several key economic indicators scheduled for release out of the United States and Canada could push the forex pair outside its statistical trading range
  • Technical indicators are portraying a mixed message, with prices trading comfortably between near-term support and resistance

Canadian Dollar implied volatility looks depressed compared to its historical average. This is particularly interesting seeing that significant event risk lies ahead for the currency. One-week (1W) implied volatility currently rests at 5.87 percent, which is below last year’s average of 7.20 percent.

USDCAD IMPLIED VOLATILITY PRICE CHART: DAILY TIME FRAME (JANUARY 01, 2018 TO FEBRUARY 25, 2019)

USDCAD Currency Implied Volatility Price Chart

With USDCAD spot prices currently resting at the 1.319 level, the implied volatility priced by the forex option market suggests that the currency pair will trade between 1.315 and 1.323. That’s a narrow band considering the plethora of economic data slated for release over the next few days.

FOREX MARKET IMPLIED VOLATILITY AND TRADING RANGES

EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, NZDUSD Forex Implied Volatility Table

Notably, the Canadian Consumer Price Index for January is scheduled to cross the wires at 13:30 GMT tomorrow along with the US Advance Goods Trade Balance for December – both of which have market-moving potential if actual data comes in materially above or below consensus.

Check out the free comprehensive Economic Calendar by DailyFX here for a full list of upcoming data releases affecting major currency pairs.

Also, 4Q 2018 GDP numbers out of the US and Canada will be released Thursday and Friday respectively, while manufacturing PMIs for the two countries will come out at the end of the week.

USDCAD CURRENCY PRICE CHART: 4-HOUR TIME FRAME (JANUARY 14, 2019 TO FEBRUARY 26, 2019)

USDCAD Currency Price Chart

USDCAD technical indicators now portray a mixed message with prices trading comfortably between near-term support and resistance at the 0.382 and 0.500 Fibonacci retracement levels.

The bearish downtrend witnessed over the last two weeks could represent a bullish flag, however, which suggests prices could pivot higher. As the setup continues to evolve, oil prices could serve as a bellwether to the CAD’s next direction if economic data is reported in line with market expectations.

Written by Rich Dvorak, Junior Analyst for DailyFX

Follow on Twitter @RichDvorakFX

Check out our Education Center for more information on Currency Forecasts and Trading Guides.