AUD/USD surrenders gains on below-forecast Aussie construction data

The bid tone around the Aussie dollar weakened following the release of a dismal Aussie data at 01:30 GMT.

Construction work done, a key metric used in GDP calculations, fell 3.8 percent in the second quarter.  That has been the largest contraction since the fourth quarter of 2017. The consensus estimate was for a drop of 1% following a 1.9% contraction in the first quarter.

With the construction data missing estimates, the probability of Australian second-quarter GDP disappointing expectations has gone up. Also, the weaker-than-expected data validates the Reserve Bank of Australia's (RBA) dovish stance. The RBA has eased policy twice since June to a record low of 1% and the financial markets are pricing in another RBA cut later this year and a follow-on move to 0.5% in February, according to Reuters. 

The weak data release and the dovish RBA expectations will likely keep the AUD on the defensive during the day ahead. The AUD/USD pair has already surrendered gains. The pair is now reporting marginal losses at 0.6747 – down 16 pips from the high of 0.6763 seen ahead of the release of the key data.

The downside, however, could be limited if the equities put on a good show. As of writing, the futures on the S&P 500 index, a global benchmark for equities, are reporting 0.28% gains.

Pivot points