US DATA: Construction Spending Picking Back Up, Led By Housing
Construction activity surprised significantly to the upside in December, rising 0.5% M/M (0.2% expected, 0.2%), with residential construction leading the way.
- Private sector construction (more than 75% of total spend, with public spending the remainder) rose by 0.9% M/M to a fresh all-time high on a SAAR basis, with residential construction up 1.5%.
- The latter is picking up again after a lull in the fall, which may have been impacted by hurricanes.
- Public sector construction - which had been soaring for most of H2 2024 - pulled back sharply at -0.5%, the weakest since July 2023 and after a 0.1% contraction in November.
- There has been a clear pickup in private versus public sector spending: the 3M/3M annualized rise in private sector spending hit a 31-month high 6.2%, with public spending slowing to 7.3% by that metric, vs double-digit growth in the preceding 2 months.
- Private nonresidential investment on the other hand remained fairly soft, growing just 0.1% M/M (same as prior) and has been fairly static for 6+ months.
- Considering the apparent recovery in both "soft" and "hard" manufacturing indicators, manufacturing construction has failed to pick up any momentum - it remains below mid-2024 levels, albeit that came after an impressive tripling of spending over the preceding 3 years.
- These figures are all in nominal terms but broadly reflect what we saw in the Q4 GDP figures: residential investment rose for the first time in 3 quarters (+5.3% Q/Q annualized in real terms) with nonresidential structures contracting for a 2nd consecutive quarter (-1.1%).
- Both look to be stabilizing going into 2025.
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JGB TECHS: (H5) Returns Lower
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 144.48/146.53 - High Nov 11 / High Aug 6
- PRICE: 142.12 @ 15:01 GMT Jan 03
- SUP 1: 141.65 - Low Dec 30
- SUP 2: 141.56 - 1.764 proj of the Aug 6 - Sep 3 - 9 price swing
- SUP 3: 141.05 - 2.000 proj of the Aug 6 - Sep 3 - 9 price swing
Markets slipped on the hawkish Fed and are yet to fully recover, touching 141.65 on the way lower. Medium-term trend signals on the continuation chart continue to point south. A resumption of the trend would pave the way for a move towards 141.56, a Fibonacci projection point on the continuation chart. A stronger recovery would open 144.48, the Nov 11 high. Further out, key resistance is at 146.53, the Aug 6 high (cont).
USDCAD TECHS: Bull Flag Highlights A Clear Uptrend
- RES 4: 1.4669 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4392 @ 15:50 GMT Jan 3
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4307/4232 20-day EMA / Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD is unchanged and bulls remain in the driver’s seat. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4307, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6408 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6247/6282 High Dec 30 / 20-day EMA
- PRICE: 0.6204 @ 15:21 GMT Jan 3
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair continues to trade closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6282, the 20-day EMA.
