Asian session traders took cues from their U.S. counterparts and pushed high-yielding bets higher on the back of Trump returning to the White House and Pelosi and Mnuchin keeping up their (socially distanced) stimulus talks.
We’ve got a few catalysts coming up in the next few hours but I think AUD/USD would still be one of the more volatile currency pairs during the London session.
Before we talk charts, here are the headlines that Asian session traders had to price in:
Major Forex Pairs Price Performance from MarketMilk
- U.S. commercial bankruptcies up 33% year to date
- Pelosi, Mnuchin talk coronavirus aid as presidential illness complicates picture
- House panel to seek breakup of tech giants, GOP member says
- Australian job advertisements rise 7.8% in September – ANZ
- Australia posts smallest trade surplus in nearly 2 years
- RBA keeps interest rates on hold as it waits to see the federal government’s cards
- Asian stocks at two-week high as Trump returns to White House
Upcoming Potential Catalysts on the Economic Calendar:
- Germany’s factory orders at 6:00 am GMT
- Australian Treasury’s annual budget release at 8:30 am GMT
- U.K.’s construction PMI at 8:30 am GMT
- ECB President Lagarde to give a speech at 8:35 am GMT
- U.S. and Canada’s trade balance reports at 12:30 pm GMT
What to Watch: AUD/USD
AUD/USD 1-hour Forex Chart
As expected, the Reserve Bank of Australia (RBA) kept its interest rates steady at 0.25% as Governor Lowe and his team await the Treasury’s annual budget report where a boatload of fiscal stimulus is expected.
The RBA was cautiously optimistic, saying that its latest stimulus package is “working as expected,” but also cautioned that “recovery is likely to be bumpy and uneven” for “some time” before returning to its 2019 levels. This is probably why RBA members haven’t ruled out another rate cut and just shared that they will continue to consider additional monetary easing.All eyes are now on Australia’s budget report, which will likely include tax cuts and spending plans that would boost infrastructure, energy, and financial activity.
If the plan comes out short of analysts’ expectations, then we could see AUD/USD drop below its trend line support to revisit the .7135 zone closer to the 200 SMA.
But if the plan satisfies stimulus geeks, or if the risk-friendly vibe extends to London session trading, then AUD/USD could break above the 61.8% Fib and ascending triangle resistance to retest the .7235 previous area of interest.
