Closing out the week with another look at AUD/USD ahead of a slew of potential economic catalysts from China and the U.S.
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Fresh Market Headlines & Economic data:
- US weekly jobless claims unexpectedly rise, sparking fears the labor market is losing steam
- Prices for U.S. imports declined 0.3% in May, following an increase of 0.1% in April
- Oil prices jump more than 3% on tanker attacks in the Gulf of Oman
- Tory leadership contest: Boris Johnson tops first ballot
- SNB’s Jordan says central bank has room for more expansionary policy
- Industrial production down by 0.5% in euro area; Down by 0.7% in EU28
- EU steps up pressure over Italy debt, flags stability concerns
- Australia jobless rate fails to fall, argues for July rate cut
- Nationally, new house prices in Canada remained unchanged in April for a third consecutive month
- Japan Tertiary Industry Activity m/m 0.8% vs. -0.2% previous
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand manufacturing index at 11:30 pm GMT
- New Zealand food prices at 11:45 pm GMT
- China industrial production, retail sales, unemployment rate at 3:00 am GMT (June 14)
- Japan industrial production & capacity utilization rate at 5:30 am GMT (June 14)
- German wholesale price index at 7:00 am GMT (June 14)
- French CPI at 7:45 am GMT (June 14)
- U.S. retail sales at 1:30 pm GMT (June 14)
- BOE Governor Carney speaks in London at 1:55 pm GMT (June 14)
- U.S. consumer sentiment & business inventories at 3:00 pm GMT (June 14)
What to Watch: AUD/USD
It’s been a busy week for the Aussie for sure, and despite the weekend fast approaching, Aussie traders can’t rest yet as we’ve got economic updates from China coming soon that would likely spark volatility in the Australian dollar one last time. And we’ve also got a top tier economic update from the U.S. coming in the Friday morning U.S. session in the form of the latest retail sales data, making AUD/USD the prime candidate for our final watchlist post of the week.
On Monday, we spotted the neckline reteset after double top on AUD/USD, and it looks like the bears eventually took control after weak Australian economic updates (consumer confidence tumbles & jobless rate fails to fall), but the move seems to have found a bottom around the 0.6900 handle. So, it’s up to the upcoming economic events to get this pair moving again, and if we see a bounce higher, the area around 0.6935 could draw in potential resistance as it was a minor resistance area at the end of May, and even saw a flash of resistance yesterday during the momentum move lower.
For the bears, if Chinese data disappoints and U.S. retail sales is positive, this area after resistance/reversal candle patterns could be the place to test out a short position, especially if stochastic signals short-term over bought conditions.
For the bulls, given the momentum lower, it’s a tough argument at the moment, but if the market moves lower ahead of the Chinese data, then watch out for the 0.6870 area that was a previous strong support level. If retested and the Chinese data surprises positive, there could be a bounce higher not only on the data, but possibly on some end-of-week profit taking. If this scenario plays out and the U.S. data disappoints, a break above the 0.6900 handle is not out of the question given the daily ATR of around 40 – 50 pips.