Big time catalysts ahead and a steady downtrend in price could mean fresh short-term opportunities soon in GBP/AUD.
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Fresh Market Headlines & Economic data:
- Oil hits 2019 high above $72 on China growth, lower US crude stockpiles
- US trade deficit falls in February as shortfall with China decreases 28%
- China’s GDP, Industrial Output and Retail Sales Top Expectation
- Sterling kept in check after inflation holds below BoE target
- Euro zone current account surplus narrows in Feb
- Bank of Japan ready to deploy monetary policy tools to fight crisis: deputy governor
- Canadian CPI rose 1.9% y/y in March, up from a 1.5% increase in February
- Canada’s merchandise trade deficit narrowed slightly from $3.1B in January to $2.9B in February
Upcoming Potential Catalysts on the Forex Calendar:
- Crude oil inventories at 3:30 pm GMT
- Fed Bullard speaks at 5:30 pm GMT
- Fed Beige Book at 7:00 pm GMT
- Australia employment at 2:30 am GMT (Apr. 18)
- NAB Quarterly Business Confidence 2:30 am GMT (Apr. 18)
- Various European flash manufacturing PMI updates starting at 8:15 am GMT (Apr. 18)
- U.K. retail sales at 9:30 am GMT (Apr. 18)
What to Watch: GBP/AUD
We’ve been getting better-than-expected Chinese data recently, and not only has it sparked positive risk sentiment and an improving global growth outlook, it’s likely the reason why we’ve seen the Australian run higher in recent weeks.
Today was no exception after all around positive updates in China GDP, retail sales, and industrial output, and we could see potentially more volatility later with Australia’s quarterly employment update. The expectation is for an increase in net jobs but a slight uptick in the unemployment rate, so the odds of the market reaction are pretty even right now for either side. And the U.K. will release its monthly retail sales update, so we should get a fair amount of play in Sterling if that number surprises tomorrow.
With all that, GBP/AUD should see some action, and based on recent price action, the trend seems to be in favor of the bears right now. The pair has been in a steady downtrend since mid-March, so it’s probably a good guess technical traders are leaning towards sell at the moment. If volatility picks up and brings the pair back to the strong area of interest around 1.8250 – 1.8300, technical traders could hop in there for another opportunity to play the downtrend. This makes sense to do if Aussie jobs comes inline or better-than-expected vs. a weaker-than-expected updated in U.K. retail sales.
For the bulls, a long position is a tough call right now other than profit taking from the recent swing move from 1.8300 down to 1.8100, but the next best bet maybe just to see if Aussie jobs disappoints and U.K. retail sales comes in positive, then watch out for a break of the falling ‘highs’ around 1.8300 to get interested in the position. With a daily ATR of around 160 – 170 pips, these situations are probable within the next session or two.