We’ve got fresh economic updates from both Australia and Canada on the way, making this strong area of interest on AUD/CAD the levels to watch for the session!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12429.54 +0.34% FTSE: 7568.04 +0.48% S&P 500: 3013.16 -0.04% DJIA: 27374.31 +0.06% |
US 10-yr 2.124% +0.032 Bund 10-YR -0.253% +0.002 UK 10-YR: 0.805% +0.004 JPN 10-YR: -0.12% -0.001 |
Oil: 60.66 +0.38% Gold: 1415.60 +0.22% Bitcoin: 10463.00 -4.55% Etherium: 217.72 -6.16% |
Fresh Market Headlines & Economic data:
- US retail sales rose by 0.4% in June to beat expectations. May was revised slightly down to 0.4% from 0.5%
- U.S. manufacturing output climbs for second month in June
- U.S. Homebuilder sentiment ticks up slightly, as housing shortage intensifies
- Foreign investors acquired $10.2 billion of Canadian securities in May, following two months of divestment
- Oil steadies as U.S. supply concerns ease but Iran tensions loom
- U.K. Wages Rise at Fastest Pace Since 2008 in Tight Labor Market
- The ZEW Indicator of Economic Sentiment for Germany decreased slightly to -24.5 in July 2019
- Euro area international trade in goods surplus €23.0B
- EU braces for no-deal Brexit or another delay under Boris Johnson
- Australia’s central bank ready to cut rates again ‘if needed’
- New Zealand consumer prices rise 0.6% q/q, 1.7% y/y
Upcoming Potential Catalysts on the Forex Calendar:
- Fed’s Powell speaks at Bank of France dinner at 6:00 pm GMT
- Fed’s Evans speaks in Chicago at 8:30 pm GMT
- TIC net Long-Term transactions at 9:00 pm GMT
- Australia Westpac-MI Leading index at 1:30 am GMT (July 17)
- U.K. Inflation updates (CPI, PPI, HPI) at 9:30 am GMT (July 17)
- European CPI at 10:00 am GMT (July 17)
- U.S. Building permits & housing starts at 1:30 pm GMT (July 17)
- Canada CPI & manufacturing sales at 1:30 pm GMT (July 17)
What to Watch: AUD/CAD
Both Cyclopip and Big Pippin pointed already pointed out strong technical arguments for a potential short play on AUD/CAD on the higher time frames, and we think it’s time to look at it on the shorter time frame with a fundamental context.
Going into the next session, we’ve got potential market movers for AUD/CAD, first the Westpac-MI Leading Index update for the Aussie during the upcoming Asia session, then the CPI update from Canada in the Wednesday morning U.S. session. The CPI update will likely be the catalyst for movement from this pair, but the Australian leading index number could be interesting for the Aussie as it has turned negative in recent releases.
Right now, the price action is in favor of the bears with the longer-term trends to the downside, making the resistance around 0.9200 the area to watch for conservative sellers to potential hop in. A short there and targeting the next area of interest around 0.9120 makes for a good potential return-on-risk if using the daily ATR of 40 – 50 pips as a stop. But given that the market recently retested and reversed lower, more aggressive traders could look to short around current levels for a somewhat decent potential short-term R:R if targeting the same minor support area around 0.9120 and a good R:R if targeting the recent major swing low around 0.9080.
For the bulls, we’re going to have to see a very positive Aussie leading index update and negative Canadian CPI update to get the pair out of the downtrend, and maybe even positive U.S-China trade deal news or weakness in oil prices. If any of these scenarios play out and we get a break above 0.9200, then watch out for a retest and hold of that area before considering long positions.
