AUD/USD traders have been pretty quiet this week. Will the upcoming Aussie & U.S. economic data be the spark for a consolidation breakout?
Intermarket Snapshot
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US 10-yr 2.525% +0.014 Bund 10-YR 0.009% -0.005 UK 10-YR: 1.166% +0.015 JPN 10-YR: -0.039% -0.006 |
Oil: 62.00 -2.52% Gold: 1270.80 -1.04% Bitcoin: 5366.04 +1.05% Etherium: 157.50 -0.34% |
Fresh Market Headlines & Economic data:
- 2019 April U.S. Job Cuts Report: Cuts Down to 40,023, YTD Up 31%
- U.S. factory orders post largest increase in seven months
- Bank of England ups growth view, Brexit keeps rate rise on ice
- House building helps UK construction sector return to growth in April
- German retail sales fall in March
- Eurozone Manufacturing sector continues to contract during April
- After a brutal 2018, Australian new home sales look to have stabilised
- In March 2019, the seasonally adjusted number of new dwellings consented in New Zealand fell 6.9% vs. rising 1.7% in February 2019
Upcoming Potential Catalysts on the Forex Calendar:
- Australia AIG services PMI at 11:30 pm GMT
- Australia building approvals at 2:30 am GMT (May 3)
- Switzerland CPI at 7:30 am GMT (May 3)
- European CPI estimate & PPI at 10:00 am GMT (May 3)
- U.S. employment update at 1:30 pm GMT (May 3)
- ISM non-manufacturing PMI at 3:oo pm GMT (May 3)
What to Watch: AUD/USD
This week has been a snoozefest for AUD/USD which has traded in mostly a 20 pip range, with exception to a 20 pip rally by the USD after yesterday’s not-so-dovish FOMC meeting. But we’ve got the monthly U.S. employment update coming Friday, which means this tight consolidation may be poised for breakout. We’ve also got Australian services PMI and building approvals data coming into during the Asia session to possibly shake things up, but the odds of seeing significant volatility are pretty low unless we see some really big surprises.
So, the event to focus on is tomorrow’s NFP report and to get full details on what the expectations are, check out Forex Gump’s trading guide. For the bulls, the situation to look out for is a positive read on Australian data (not likely as Australian housing market is only starting to stabilize) and weak U.S. jobs data (e.g., lower wage growth and a net increase below 180K). If this scenario plays out, a break above the consolidation highs around 0.7060 should be thrown onto the watchlist for a potential live play.
For the bears, if Australian housing data worsens and the U.S. sees wage growth AND a net jobs increase over 180K – 190K, then the recent trend lower is likely to remain intact. For the conservative types, waiting for a retest of the consolidation area gives the best potential return-on-risk if using the daily ATR of around 50 pips as your stop and two times that as your target (achievable given the potential catalyst). For the more aggressive, shorting on a break of the recent swing lows is not a bad entry strategy either due to the fact that there doesn’t seem to be another support area to be seen until .6800 – .6900, which hasn’t been seen since 2015 – 2016.
