AUD/CAD Approaches Key Resistance Amid Forecast of Slowing Building Permits Growth in Canada

AUD/CAD  Forecast & Technical Analysis

On Tuesday, at GMT 12:30 a.m., the National Australia Bank (NAB) Limited released 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, HighLow traders 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 1 and 4 in August. This month, if the downtrend continues, it will likely have a negative impact on the Australian Dollar.

Canada – Building Permits

On Tuesday, at GMT 12:30 p.m., Statistics Canada will publish 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, binary options investors 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 grew by as much as 3.0%. Analysts are expecting it to grow at 2.3% this month.

AUD/CAD Forecast

AUD/CAD Forecast - Daily Chart - Oct 7 2019

Since forming a Doji back in April 17, 2019, the AUD/CAD remained in a sustained downtrend. Over the last six months, it fell by around 770 pips. On October 3, 2019, the AUD/CAD broke above the long-term downtrend line. Currently, it is approaching the resistance near the 0.9050 level.

The Australian NAB Business Confidence reading fell from 4 to 1 last month. However, analysts are expecting the Canadian building permits growth to slow down from 3.0% to 2.3% over the last month. We believe it would set a bullish fundamental outlook for the AUD/CAD this week. Therefore, if the AUD/CAD closes above the resistance near 0.9050, it would likely attract additional bullish momentum in the market.

Hence, Australian High Low binary options traders should look out for trading opportunities above this major resistance level around 0.9050.


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John Walker

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