Canada – Building Permits
Earlier yesterday at GMT 1:30 p.m., the Statistics Canada released the month-over-month building permits data that measures the changes in the total value of new issued building permits in the country. The new building permits figure acts as an excellent gauge of construction works in the future as getting a building permit indicates the intention of constructing a building.
When a new building is constructed, it involves purchasing building materials as well as hiring of workers. Hence, economists and participants of binary options trading consider the building permits figure to be a leading indicator of the overall future economic activity in the country.
Last month, during November, the Canadian issued building permits went down by 12.5%, indicating a slowdown in the housing sector. Regardless, this month, the forecast was set at a modest increase of 2.1%. However, the actual figure came out way below the market’s expectation, at 0.7% increase.
Australia – National Australia Bank Limited (NAB) Business Confidence
Earlier today, at GMT 12:30 a.m., the National Australia Bank Limited (NAB) released its business confidence index, which measures the level of a diffusion index created by surveying 350 businesses. The survey asks respondents about their view about the economic conditions in the country.
Since businesses are the first to react to changing business climate, their collective view about the economy can indicate the future spending, job situation and investment climate in the country. Therefore, binary options traders tend to pay close attention to the NAB business confidence index.
In November, the NAB business confidence index came out at 5. However, this month, it came out at 1, indicating a significant shift in the perception of businesses regarding the future economic growth in Australia.
Trade Recommendation for the AUD/CAD
The AUD/CAD has been in a down trend since September 5. After failing to penetrate the support around the 0.9700 level twice in the first two weeks of October, it started a retracement and formed a triangle pattern, which was broken on November 19. After closing below the 0.9700 level on November 25, the AUD/CAD continued with the bearish momentum and reached the 261.8% extension level of the last swing within the triangle, at 0.946, this week. So far, the AUD/CAD is trading near this level.
As the Australian NAB business confidence index has gone down considerably over the past month, it might be difficult for the AUD/CAD price to bounce from this level. On the other hand, the Canadian new building permits figure has also slowed down over the past few months. Fundamentally, under the circumstances, binary options traders should not look for a strong trend in this pair.
However, given that the AUD/CAD price fell for the last several weeks, it would be a wise to only look for opportunities to place PUT orders once the pair closes below the 0.9469 level. Again, if the AUD/CAD starts to retrace from the current price level, the 0.9700 level will act as a strong resistance and binary options traders may place a PUT order near that price level as well.
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About our Forex Analyst: Asif Imtiaz
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