AUD/USD drops below 0.73 on weaker-than-expected Aussie Q2 Capex reading

• Australia capital expenditure (CAPEX) unexpectedly declined in the second quarter (Q2).
• Australia building approvals dropped more than expected in July.
• The AUD/USD is reporting losses on the back of dismal macro data releases, could suffer a deeper decline on dovish RBA expectations.  

The AUD/USD fell to a session low of 0.7275 after the Q2 CAPEX printed negative and the building approvals fell more than expected.

The headline CAPEX fell 2.5 percent quarter-on-quarter, missing the estimated growth of 0.6 percent from the previous quarter's print of 0.4 percent. Further, building permits fell 5.2 percent month-on-month vs the estimated decline of 2.5 percent.

The dismal headline figure could force the investors to scale back expectations of an RBA rate hike. The central bank's ability to hike rates is already dented by Westpac's decision to hike rates by 0.14 percent.

So, it seems safe to say that, for the AUD, the path of the least resistance is to the downside. However, the third estimate of the 2018/2019 spending came-in at AUD 102 billion as expected and that could cap the immediate downside in the pair.

At press time, the currency pair is trading at 0.7385.

AUD/USD Technical Levels

Resistance: 0.73 (psychological level), 0.7323 (200-hour MA), 0.7349 (hourly chart resistance)

Support: 0.7275 (previous day's low), 0.7238 (Aug. 23 low), 0.72 (psychological support)

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