AUD/CAD Approaches Support Near 0.8840 Amid Unexpected Surge in Canadian Building Permits

AUD/CAD  Forecast & Technical Analysis

Canada – Building Permits

On Monday, at GMT 1:30 p.m., Statistics Canada published the monthly Building Permits figure. It measures the changes in the total number of new permits issued for constructing new premises in the country.

Building permits are mandatory to start building construction. So, the number of new permits acts as a leading indicator of the future construction activity in the country. Also, HighLow traders consider that new constructions help energize the economy, as new buildings require materials from many other industries.

Last month, the amount of new Building Permits declined by as much as -3.5%. Analysts were expecting it to grow at 3.5% this month. However, the actual figure came out way better and grew by 7.4%.

Australia – National Australia Bank (NAB) Limited Business Confidence Index

On Tuesday, at GMT 12:30 a.m., the National Australia Bank (NAB) Limited will release its monthly business confidence index figure. It measures the level of a diffusion index based on a survey of 350 businesses in Australia.

The survey asks respondents to rate the current business environment in Australia. Businesses are the first to react to changing business conditions. So, binary options investors consider it as a leading indicator of the overall economic health in the coming months. It is because the level of their sentiment can signal optimism and business confidence in the economy.

Last month, the NAB business confidence index reading came out at -2. This month, if the downtrend continues, it will likely have a negative impact on the Australian Dollar.

AUD/CAD Forecast

AUD/CAD Forecast - February 12 2020

The AUD/CAD broke below the downtrend line on January 3, 2020. Since then, it fell by around 200 pips. At the end of January, the AUD/CAD tested the support near 0.8840. But, over the last week, it started a retracement and got rejected near the resistance around the 0.8980 level. Currently, it is on its way to retest the support near 0.8840.

The Australian NAB Business Confidence went down last month and the downtrend will likely continue. On the other hand, the Canadian building permits expectedly went up by 7.4% over the last month. We believe it would set a bearish fundamental outlook for the AUD/CAD this week. Therefore, if the AUD/CAD closes below the support near 0.8840, it would likely attract additional bearish momentum in the market.

Hence, High Low traders should look out for trading opportunities below this major support level around 0.8840.

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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