AUD/USD hits the watchlist ahead of a busy calendar for both currencies, and on price action that looks like it is ready to breakout one way or another.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11908.91 +0.60% FTSE: 7227.39 +0.59% S&P 500: 2794.75 +0.42% DJIA: 25190.04 +0.25% |
US 10-yr 2.271% +0.035 Bund 10-YR -0.166% +0.008 UK 10-YR: 0.912% +0.019 JPN 10-YR: -0.084% +0.013 |
Oil: 57.67 -2.49% Gold: 1281.60 +0.35% Bitcoin: 8717.79 +0.78% Etherium: 283.62 +5.36% |
Fresh Market Headlines & Economic data:
- U.S. April pending home sales fall unexpectedly by -1.5%
- First-quarter U.S. economic growth up 3.1%, better than Wall Street expected
- China says US trade provocations are ‘naked economic terrorism’
- The U.S. international trade deficit in goods & services increased to $50.0B in March from $49.3B in February (revised)
- China makes next move in trade war, reportedly halting US soy purchases
- Germany will veto Brexit extension unless UK holds a public vote, senior MP warns
- Jeremy Corbyn signals U-turn on second referendum after party pressure
- Brexit shutdown slashes UK car production by 45%
- Falling Australian business investment, building approvals point to deepening economic slowdown
- Canada’s current account deficit (on a seasonally adjusted basis) widened by $0.7B in the first quarter of 2019 to $17.3B
- New Zealand’s 1st ‘well-being budget’ targets mental health
- New Zealand building consents fall -7.9% m/m
- BOJ policymaker warns against ‘reckless’ easing to reach price goal
Upcoming Potential Catalysts on the Forex Calendar:
- Fed Clarida speaks in New York at 5:00 pm GMT
- Bank of Canada Wilkins speaks at 7:15 pm GMT
- Japan industrial production, unemployment rate & retail sales at 12:50 am GMT (May 31)
- China manufacturing & non-manufacturing PMI at 2:00 am GMT (May 31)
- Australian private sector credit at 2:30 am GMT (May 31)
- U.K. M4 money supply, mortgage approvals & net lending at 9:30 am GMT (May 31)
- Canada GDP and producer prices at 1:30 pm GMT (May 31)
- U.S. Core PCE price index, and personal spending & income at 1:30 pm GMT (May 31)
- U.S. Chicago PMI at 2:45 pm GMT (May 31)
- U.S. UoM consumer sentiment at 3:00 pm GMT (May 31)
What to Watch: AUD/USD
Friday’s economic calendar looks pretty busy for AUD/USD as the U.S. will be giving us a couple of top tier catalysts (core PCE price index & consumer sentiment) for potential volatility, while the Aussie could be a mover on the latest Chinese manufacturing & services PMI data. And with AUD/USD in a tight range of around 30 – 40 pips over the last five sessions, we could have a potential consolidation breakout opportunity in the works.
For the bulls, that 0.6935 area has been tough to crack, but with a positive surprise from China on PMI’s, we could finally see an upside breakout. If that is the scenario that plays out, keep in mind the pair is in a longer-term downtrend and that the daily ATR is only around 40 – 50 pips. So taking a quick profit might be the prudent thing to do, especially given that the next strong area of interest for potential resistance isn’t too far away at 0.7000.
For the bears, a downside break is the higher probability play given the downtrend and the recent weakness in global economic data updates (especially in the Aussie updates seen above), so a breakdown of the 0.6900 area on weak Chinese updates and better-than-expected U.S. data is a high probability setup with a good potential reward-to-risk if the 0.6870 area breaks as well, as there doesn’t look like we have any potential support areas after that swing low ahead for now.
