This textbook trend in AUD/CAD is one to watch as we roll into the latest monetary policy statement from the Reserve Bank of Australia later in the Asia session.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a downtrend setup in USD/CAD, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Tokyo CPI at 11:30 pm GMT
Australia Home Loans, Building Permits at 1:30 am GMT (Aug. 3)
RBA Interest Rate Decision at 4:30 am GMT (Aug. 3)
Spain Unemployment Change at 7:00 am GMT (Aug. 3)
Euro area at PPI at 9:00 am GMT (Aug. 3)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: AUD/CAD
On the one-hour chart of AUD/CAD above, we can see the market recent broke from a consolidation range between 0.9225 – 0.9280 last week. And after finding buyers around the 0.9150 minor psychological level last Friday, the pair has already made it’s way back to the broken support area around 0.9220.
Not only does this set up a break-and-retest pattern, but we’ve also got a Fibonacci argument for technical sellers to hop in short ahead of a potentially volatile event: the latest monetary policy statement from the Reserve Bank of Australia.
Expectations are that the RBA will hold off from changing interest rates, but it’s highly possible we may see them call off the move to end their bond purchasing program.
This could be a bearish event for the Australian dollar, and given that it’s already in a downtrend with the Canadian dollar, the odds are pretty good that this scenario may send AUD/CAD lower this week.
So, we’re on the lookout for that scenario to play out, and if the market does indeed unload some Aussie longs, we’ll be looking to take a short position in AUD/CAD, especially if we see a retest of the broken support area/Fibonacci retracement levels before then and the bears hold.