AUD drifting ahead of construction data

The Australian dollar is flat in the Tuesday session. In the North American session, AUD/USD is trading at 0.7754, up 0.01% on the day.

Will Construction Work Done rebound?

Investors will be keeping an eye on Construction Work Done, a useful gauge of the strength of the construction sector (Wednesday, 1:30 GMT). Construction Work Done has sputtered, posting 10 straight losing quarters. However, the consensus is that the indicator will show a strong rebound in the first quarter, with an estimate of 1.9%. If the reading is within expectations, the Aussie could respond with gains.

The Federal Reserve continues to stick to its message that its ultra-accommodative policy will continue and that will maintain current QE levels. Inflation surged in April, which led to speculation that the Fed might contemplate scaling back QE. This gave the US dollar a brief boost earlier in May, but the market appears to have accepted the Fed line that higher inflation is transitory and any tightening of policy is a while off. This has put pressure on the US dollar viz-a-viz the major currencies, as investor sentiment towards the greenback has weakened.

In the US, consumer confidence remains strong, as the vaccine rollout continues and the recovery gains traction. In May, the Conference Board Consumer Confidence Index came in at 117.2, down marginally from the April read of 117.5 points. The US consumer has shown increasing optimism in recent months, as the economy heated up in the first quarter. The Conference Board expects the optimism to continue in Q2, noting that “consumers remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens.”

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AUD/USD Technical

• There is resistance at 0.7792 and 0.7854
• On the downside, there are support levels at 0.7690 and 0.7650

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-event

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