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We’ve got top tier economic updates from Australia and China on the way, and when combined with today’s volatility spike in USD, AUD/USD is one to watch for potential short-term setups.

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a bearish move in USD/JPY, 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: 15,100.13 -1.18%
FTSE: 7,059.45 -0.71%
S&P 500: 4,566.99 -1.90%
NASDAQ: 15,537.69 -1.55%
US 10-YR: 1.439% -0.09
Bund 10-YR: -0.344% -0.003
UK 10-YR: 0.822% +0.013
JPN 10-YR: 0.054% -0.018
Oil: 66.62 -4.76%
Gold: 1,774.10 -0.16%
Bitcoin: $57,693.75 -0.75%
Ether: $4,665.23 +5.67%
Solana: $214.01 +3.19%

Fresh Market Headlines and Economic Data:

Fed Chairman Jerome Powell retires the word ‘transitory’ in describing inflation

Risk aversion sentiment hit the markets after Fed Chair Powell signals that tapering may end sooner despite emergence of Omicron variant

Chicago PMI falls to 61.8 in Nov. vs. 68.4 in Oct.

U.S. House Prices Are Up 18.5%, Reports FHFA

Canada GDP grew by 5.4% in the third quarter of 2021, better than 3.0% forecast

Grayscale Launches New Trust Dedicated to Solana

Shiba Inu gains over 30% in just 2 days as Kraken announces SHIB listing

Mask mandates to tackle Omicron come into force in England

Upcoming Potential Catalysts on the Economic Calendar

API Crude Oil Stock Change at 9:30 pm GMT
New Zealand Building Consents at 9:45 pm GMT
Australia GDP at 12:30 am GMT (Dec. 1)
Japan Manufacturing PMI at 12:30 am GMT (Dec. 1)
Bank of Japan Adachi speech at 1:30 am GMT (Dec. 1)
China Caixin Manufacturing PMI at 1:45 am GMT (Dec. 1)
Germany Retail Sales at 7:00 am GMT (Dec. 1)
U.K. House Prices at 7:00 am GMT (Dec. 1)
Swiss CPI at 7:30 am GMT (Dec. 1)
France Manufacturing PMI at 8:50 am GMT (Dec. 1)
Euro area Manufacturing PMI at 9:00 am GMT (Dec. 1)

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: AUD/USD

AUD/USD 1-Hour Forex Chart
AUD/USD 1-Hour Forex Chart

We saw quite a volatile session for the broad markets on Tuesday after Federal Reserve Chair Powell commented how current inflation conditions may warrant and ending to bond purchases sooner than previously expected. The U.S. dollar and bond yields spiked higher while equities and other “risk” assets tumbled on the session. We particularly saw this with AUD/USD, which quickly fell from a strong area of interest around the 0.7150 – 0.7180 area before bottoming out around 0.7065.

Since then the markets have recovered a bit, now trading above 0.7100, but traders may not take a breather just yet with Australian GDP and China manufacturing PMI updates set to hit the markets in a few hours. Both are top tier events to watch for the Aussie, so depending on what we see vs. expectations, the Aussie may not be done moving just yet.

With elevated tapering sentiment fresh in traders minds, and yet to be priced in by traders in Asia, odds are that AUD/USD will likely maintain its slow drift lower. That makes any retest of the 0.7150 – 0.7180 area one to watch for bearish reversal patterns before considering a short-term sell position, especially if Australia GDP and/or China’s PMI data disappoints.

It’s also possible that traders may start buying more Greenbacks at the Asia open, creating a possible scenario where AUD/USD doesn’t bounce all the way back up to 0.7150. If that plays out, a move back below 0.7100 and sustained trade there could begin to entice more AUD/USD sellers to hop in, as long as we don’t get a fresh catalyst to shift attention away from increased Fed tapering speculation.