Chinese and New Zealand data ahead makes this area of interest restest on AUD/NZD one to watch. Solid breakdown or reversal ahead?
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Fresh Market Headlines & Economic data:
- U.S. consumer spending posts biggest gain since 2009
- R.I.P. Inflation: The data point the Fed watches for inflation just said there isn’t any
- Oil falls after Trump says he pressed OPEC to make up for Iranian sanctions
- China’s industrial profits pick up in March with 13.9 pct rise
- Mark Carney vows to reinvent Bank of England for ‘fourth industrial revolution’
- Brexit: Labour urged to resolve second referendum question
- Annual growth rate of broad monetary aggregate M3 increased to 4.5% in March 2019 from 4.3% in February
- Eurozone economic confidence hits two-year low
Upcoming Potential Catalysts on the Forex Calendar:
- China Manufacturing & Non-manufacturing PMI at 2:00 am GMT (Apr. 30)
- New Zealand ANZ Business confidence at 2:00 am GMT (Apr. 30)
- Australia private sector credit at 2:30 am GMT (Apr. 30)
- German Gfk consumer sentiment at 7:00 am GMT (Apr. 30)
- Swiss KOF leading Indicator at 8:00 am GMT (Apr. 30)
- European Flash GDP and unemployment rate at 10:00 am GMT (Apr.30)
What to Watch: AUD/NZD
AUD/NZD has been on a tear higher in April, bottoming out at the end of March around the 1.0300 handle to its recent highs around the 1.0700 handle last week. But on the one hour chart above of AUD/NZD, we can see that the pair has fallen from the highs last week to test the minor support area around the 1.0580 handle. Despite the recent pullback, this pair is still in a short-to-medium-term uptrend, and the question now is will this area hold as support once again, or is the recent downward momentum enough to make it a true breakdown?
We’ll have to wait and see but the answer could lie in the forex calendar summary above. We’ve got top tier Chinese data ahead in the form of manufacturing and non-manufacturing sentiment ahead, which could be a market mover for the Aussie given Australia and China’s close relationship and how the Aussie does normally react to Chinese data in the past. And from New Zealand, the ANZ business confidence data has been a short-term catalyst for the Kiwi in recent months, so the odds are pretty good the volatility will be enough for the market to break away from the 1.0580 area of interest.
For the bulls, look out for Chinese data to be positive and give us more signs of global growth stability, and/or the New Zealand business confidence data to disappoint. This is the expected scenario to play out, so odds are good at the moment AUD/NZD could reverse back into the medium-term uptrend and trade above 1.0600 to 1.0650 in the next session or two.
For the bears, disappointing Chinese data would be a surprise, and likely a strong reaction could come to the Aussie. Look for this scenario coupled with a break of Friday’s and today’s lows to get interested in a short positions. The daily average true range is around 50 pips, making the major psychological area around 1.0500 an attainable target within the session with this level of data importance, and keeping a stop tight to just above the 1.0600 major psychological level makes for a very attractive potential return-on-risk trade.