Is the PBoC in panic mode lately? And how might this affect the Aussie?
I’m keeping an eye out for this new trend forming on GBP/AUD.
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/USD’s trend line resistance after the RBA decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. ISM services PMI improved from 56.7 to 56.9 vs. 55.4 forecastNew Zealand dairy prices rebounded by 4.9% in latest auction
Australia’s AIG services index up from 51.7 to 53.3
Australian economy expanded by 0.9% in Q2 as expected, Q1 GDP downgraded
Japanese leading indicators fell from 100.9% to 96.6% in July
Japanese finance minister Suzuki says gov’t will not tolerate “one-sided” FX moves
Japan’s chief cabinet secretary Matsuno ready to take action on JPY if needed
PBoC set USD/CNY reference rate at 6.9160 vs. 6.9686 forecast
German industrial production dipped by 0.3% vs. projected 0.5% decline
U.K. house prices ticked higher by 0.4% vs. projected 0.1% increase
Upcoming Potential Catalysts on the Forex Economic Calendar:
BOE monetary policy report hearings at 9:00 am GMT
BOC interest rate statement at 2:00 pm GMT
Speeches from FOMC members Brainard and Mester coming up
Canadian Ivey PMI at 2:00 pm GMT
Fed Beige Book at 6:00 pm GMT
RBA Governor Lowe’s testimony at 3:05 am GMT (Sept. 8)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/AUD
This pair recently busted through its short-term descending trend line, indicating that a reversal from the downtrend is in the works.
Price hit a ceiling around the 1.7130 area, though, so a pullback might be in order. If you’re bullish on GBP/AUD, then this might be your chance to hop in at bargain levels!The Fibonacci retracement tool shows that the 61.8% level is closest to the former trend line and is also right around the dynamic support at the moving averages.
However, the 50% level is also looking like a prime entry spot since it coincides with an area of interest and the 1.7000 major psychological mark.
While the bullish moving average crossover confirms that support areas are more likely to hold than to break, Stochastic is suggesting that the correction could keep going for a bit longer. After all, the oscillator is just starting to make its way down from the overbought area.
Besides, I’d stay on the lookout for any shift in market sentiment when trading this one. The higher-yielding Aussie has been extra sensitive to risk flows lately, giving up ground on reports of more lockdowns and COVID-19 cases in China.
On the flip side, sterling seems to have gotten a fresh boost from the appointment of Liz Truss as the new U.K. PM. Can this wave of optimism take GBP/AUD back up to the swing high and beyond?