Checking out EUR/AUD today ahead of what could be a busy session for the Australian dollar. Will the latest monetary policy statement from the Reserve Bank of Australia spark big moves?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a consolidation break setup on USD/JPY ahead of U.S. data, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 15107.17 +0.66% FTSE: 6737.30 0.35% S&P 500: 4077.91 +1.44% NASDAQ: 13705.59 +1.67% |
US 10-YR: 1.704% -0.019 Bund 10-YR: -0.327% -0.002 UK 10-YR: 0.797% 0.000 JPN 10-YR: 0.108% -0.014 |
Oil: 58.78 -4.34% Gold: 1,729.30 +0.052% Bitcoin: 58,853.00 +1.35% Ethereum: 2,108.30 +1.52% |
Fresh Market Headlines & Economic Data:
Dow climbs 370 points to close at a record high amid optimism on the economic recovery
Crypto market cap soars to record $2 trillion, bitcoin at $1.1 trillion
Oil loses $2/bbl as rising OPEC+, Iranian output weighs
Yellen to push for global minimum tax on corporations
ISM Services PMI rises to 63.7 in March vs. 55.3 in Feb
IHS Market U.S. Services PMI registers 60.4 in March vs. 59.8 in February
U.S. factory orders decline in February
Scotiabank is cautious on Canada housing as RBC, BMO seek action
Upcoming Potential Catalysts on the Economic Calendar
Japan Household spending, Average Cash Earnings at 11:30 pm GMT
Australia Job Advertisements at 1:30 am GMT (Apr. 6)
China Services PMI at 1:45 am GMT (Apr. 6)
RBA Interest Rate Decision at 4:30 am GMT (Apr. 6)
Spain Unemployment Change at 7:00 am GMT (Apr. 6)
Italian Unemployment Rate at 8:00 am GMT (Apr. 6)
Euro Area Unemployment Rate at 9:00 am GMT (Apr. 6)
Spain Consumer Confidence at 10:30 am GMT (Apr. 6)
What to Watch: EUR/AUD
EUR/AUD 1-Hour Forex Chart
We’ve got the latest interest rate decision coming soon from the Reserve Bank of Australia, but expectations are likely that we won’t see any new moves. They’ve already made moves last month to keep bond yields low and remain supportive of the economy, so it’s likely they’d like to see more data than one month before taking a step in any direction.
With that said, surprises do happen, and if we do get an unexpected statement from the RBA, the Aussie is sure to rocket one way or another. And for us, we think the improvements in business sentiment (Recovery in Australian manufacturing gathered further pace in March) and jobs data (Australia unemployment drops to 5.8% as recovery strengthens) may outweigh negative updates (Australia retail sales fell 0.8% m/m; +9.1% y/y in February) and lockdown measures to have the RBA lean towards an optimistic tone to today’s statement.
Again, it’s a low probability of any kind of definitive change to policy, but if we do see an optimistic lean in rhetoric that hints of potential tightening, we’ll watching the one hour chart of EUR/AUD above for a downside break of the triangle consolidation pattern.
If so, that could draw in technical / momentum sellers, and with a daily ATR of around 130 pips, that could easily take the market to the previous swing low of around 1.5350, or possibly to the major psychological level of 1.5300.
Of course, we can’t rule out the opposite scenario of the RBA sounding off increased economic concerns due to the lockdowns / potential business failures, and if the Aussie dollar takes a dive on that news, then we could see 1.5500, or even a retest of 1.5550 within a session or two.
