Australian capital expenditure fell by 4.2% in Q1 2014, much more than only 1.5% expected. However, when the details of the report were digested, the Australian dollar staged a nice rally.
AUD/USD bounced off support at 0.9220 and climbed to resistance at 0.93, trading the range in a very nice manner, and even tries moving higher.
The “secret sauce†in the report was the composition of new investment: most of the drop in investment came from the mining sector and it was balanced by growth in other sectors. This shows that the Australian economy has real prospects of re-balancing and liberating itself from the dependence on the resource sector.
In addition, companies indicated that investment in the economy will fall by less than they had earlier anticipated. This improvement is watched closely by the Reserve Bank of Australia, that looks out for the long and medium term prospects rather than the short term ones.
AUD/USD perfect range trading
As the chart shows, AUD/USD bounced off support at 0.9220, a line that worked perfectly well for the pair time and time again. The attempt to recapture 0.93 failed as well. 0.9250 continues to work as a pivotal line within the range. 
For more lines, events and analysis, see the AUDUSD forecast.
