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A surprisingly less dovish RBA boosted the Aussie earlier today. Can the bulls maintain their momentum in the next trading sessions?

Currency Snapshot:

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Switzerland’s CPI at 7:30 am GMT
  • France’s government budget balance at 7:45 am GMT
  • Spain’s unemployment change at 8:00 am GMT
  • U.K.’s construction PMI at 9:30 am GMT
  • Euro Zone’s PPI at 10:00 am GMT

What to Watch: GBP/AUD

GBP/AUD 1-Hour Forex Chart
GBP/AUD 1-Hour Forex Chart

As expected, the Reserve Bank of Australia (RBA) kept its interests steady at 0.75% in December.

What traders didn’t expect was that the central bank would talk about the “long and variable lags in the transmission of monetary policy,” which suggests that members are cool with waiting a couple more months before they act on their concerns. Economic firms like Westpac, however, still believe that RBA will still cut its rates as early as February and maybe even pull off a QE next year.

On the other side of the trade, a not-so-weak spending report printed a few hours ago and Tory enjoying a low key consistent lead over Labour could attract some pound bulls.

This is convenient since MarketMilk is pointing out that RSI, Stochastic, Williams %R, and Keltner Channel are all flashing “oversold” signals on GBP/AUD’s 1-hour time frame.

A long trade around the current levels would make for decent good reward-to-risk ratio especially if I aim for the 1.9050 previous area of interest and place my stops just below the 1-hour range.

If AUD bulls maintain their momentum and GBP/AUD ends up breaking lower, however, then previous resistance areas like 1.8800 would make for good profit targets.

Whichever direction you choose to trade, take note that GBP/AUD tends to move by around 120 pips on Tuesdays for the past 30 days.