AUD/CHF may see some action in the upcoming Asia session with the latest monetary policy statement from Reserve Bank of Australia. Will the short-term downtrend continue?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a potential setup on EUR/USD after breaking below a rising trendline, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
| Equity Markets | Bond Yields | Commodities & Crypto |
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Fresh Market Headlines & Economic Data:
- Dow climbs more than 200 points on the first trading day of May, retail stocks lead gains
- Fed’s Powell says economic recovery clouded by racial, education gaps
- Fed’s Barkin says it is not time yet to talk about taper
- ISM manufacturing PMI falls 4 points to 60.7 in April.
- Strongest improvement in U.S. operating conditions on record amid marked uptick in client demand
- CME Group’s Micro Bitcoin Futures Open for Trading
- Eurozone manufacturing PMI hits fresh survey record high in April
- German Manufacturing sector continues to show strength despite
- French manufacturing sector growth remains strong in April
- WHO is closely monitoring 10 Covid variants as virus mutates around the world
Upcoming Potential Catalysts on the Economic Calendar
Fed Chair Powell speech at 6:20 pm GMT
Australia Trade Balance, Home Loans at 1:30 am GMT (May 4)
RBA Interest Rate Decision at 4:30 am GMT (May 4)
Swiss Consumer Climate at 7:00 am GMT (May 4)
U.K. Mortgage Approvals, Manufacturing PMI at 8:30 am GMT (May 4)
What to Watch: AUD/CHF
On the one hour chart above, we’ve got a bounce on the session in a roughly slow grind lower on AUD/CHF. This price pattern tends to draw in both technical players and fundamental players looking to sell, but that may not be the case in the upcoming Asia session with the Reserve Bank of Australia set to announce their latest monetary policy decisions.
Expectations are that the RBA will hold off on making any changes to monetary policy even with improvements to economic data, business sentiment and higher inflation, but what could move the Aussie is if we see a change in rhetoric from the RBA that could signal a possible tapering of stimulus measures.
If this scenario plays out, this could mean a bullish move for the Aussie and the price action to watch out for is a sustained break above the strong area of interest / Fibonacci retracement levels marked on the chart above.
If we don’t get optimistic rhetoric from the RBA, this may spark a continued move lower in AUD/CHF as the event uncertainty will be clear, allowing trend traders to hop in the short-term downtrend at better prices. If that’s the case, then a move to retest the swing lows around 0.7030 should not take too long as it is within the daily ATR of around 50 pips.
