The Aussie is on the move after disappointing business sentiment data. With risk sentiment falling, more Australian & Chinese data, and the Fed Chair speaking ahead, will the recent fall in AUD/USD still have legs?
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12435.73 -0.86% FTSE: 7534.01 -0.20% S&P 500: 2970.53 -0.18% DJIA: 26705.74 -0.37% |
US 10-yr 2.063% +0.029 Bund 10-YR -0.351% +0.025 UK 10-YR: 0.736% 0.022 JPN 10-YR: -0.138% +0.009 |
Oil: 58.20 +0.52% Gold: 1437.50 +1.36% Bitcoin: 12384.04 +0.34% Etherium: 311.41 -0.73% |
Fresh Market Headlines & Economic data:
- According to the NFIB Small Business Optimism Index, small business optimism took a modest downturn to 103.3 in June
- Canadian housing starts surge 26% in June -CMHC
- The value of permits issued by Canadian municipalities declined 13.0% to $8.2 billion in May
- Fed Chair Powell’s job is safe ‘at the present time,’ Larry Kudlow says
- U.S. oil seen up for fourth straight gain
- Bitcoin Is Soaring, Boosting Ethereum, Ripple’s XRP And Litecoin–Here’s Why
- Bid to block no deal through Northern Ireland Bill falters
- In May 2019, Italian retail trade fell an estimated 0.7% m/m, the fourth consecutive month of no positive growth
- ECB Seen Readying the Pumps for Return to Massive Bond Buying
- Australia business confidence falls back in June
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand FPI at 11:45 pm GMT
- Japan PPI at 12:50 am GMT (July 10)
- Australia Westpac consumer sentiment at 1:30 am GMT (July 10)
- Chinese CPI & PPI at 2:30 am GMT (July 10)
- U.K. GDP, trade balance & manufacturing production at 9:30 am GMT (July 10)
- Bank of Canada monetary policy statement at 3:00 pm GMT (July 10)
- Fed Chair Jerome Powell to testify on semiannual Monetary Policy Report
What to Watch: AUD/USD
As mentioned in the intro, the Australian dollar took a little bit of a spill during the Tuesday trading session after disappointing business sentiment data, suggesting that we shouldn’t expect a big pickup in second quarter growth. That was especially true for today’s watchlist pair, AUD/USD, which after double topping just below 0.7050, has now broken a minor support area between 0.6950 – 0.6970, highlighted in the one hour chart above.
So, the odds are in favor of AUD/USD bears at the moment, and volatility might not stop here as we have a slew of potential catalysts with coming up from Australia (Westpac consumer sentiment), China (CPI & PPI), and the Federal Reserve Chairman Jerome Powell’s testimony to Congress tomorrow. If you are a bear, a retest of the broken minor support area should be on your radar, as well as disappointing Australian and Chinese data combined with a bearish reaction in the pair.
If you’re a bull, breaking above that area of interest in between 0.6950 – 0.6970 is a tall order without very positive Australian and Chinese data, which is a very low probability outcome at the moment. You might also need Powell to signal a 50 bps rate cut at his testimony tomorrow for the Greenback to shift its recent bullish stance. So right now, a long position in AUD/USD is a very low probability bet, and probably shouldn’t be considered until we see a retest of 0.6900 with the above bullish scenarios starting to play out.
