Big day ahead with top tier economic data from both China and Australia set to keep Aussie traders moving. Will the early week weakness in the Aussie continue?
Intermarket Snapshot
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Fresh Market Headlines & Economic data:
- US consumer spending, prices rise moderately
- Annual U.S. home price gains dip to 3.4% according to S&P CoreLogic Case-Shiller Index
- U.S. Consumer Confidence rebounds in July to 135.7, vs 125 expected
- U.S. Pending home sales beat expectations, breaking 17-month losing streak, thanks to lower mortgage rates
- Boris Johnson’s no-deal Brexit gamble hits sterling
- Australia building approvals -1.2% in June vs. 0.3% in May
- In June 2019, the seasonally adjusted number of new dwellings consented fell 3.9% in New Zealand, after rising 14% in May 2019
Upcoming Potential Catalysts on the Forex Calendar:
- U.K. GfK consumer confidence at 12:01 am GMT (Jul 31)
- China manufacturing & services PMI at 2:00 am GMT (Jul 31)
- New Zealand business confidence at 2:00 am GMT (Jul 31)
- Australia CPI & private sector credit at 2:30 am GMT (Jul 31)
- Japan consumer confidence & housing starts at 6:00 am GMT (Jul 31)
- German retail sales at 7:00 am GMT (Jul 31)
- French CPI at 7:45 am GMT (Jul 31)
- German unemployment at 8:55 am GMT (Jul 31)
- European CPI, GDP & unemployment rate at 10:00 am GMT (Jul 31)
- U.S. ADP Non-farm employment at 1:15 pm GMT (Jul 31)
- Canada GDP & inflation at 1:30 pm GMT (Jul 31)
What to Watch: AUD/CAD
The Australian dollar has been taking blows this week, possibly on China economic data weakness stemming from the trade war, and maybe even a little bit of global risk aversion sentiment on rising geopolitical fears like a rising no-deal Brexit scenario. And with Australian CPI and Chinese business sentiment data right around the corner (both top tier economic events & potential market movers for the Aussie), it’s likely Aussie volatility will continue for the next session or two.
So, we’re on the lookout for more Aussie moves, and given the current short-term downtrend, it’s higher probability scenario to go with the trend. This makes the downtrend in AUD/CAD very interesting as we just saw break of the 2019 lows around the 0.9075 level. This could draw in more technical sellers, especially if the upcoming Australian and Chinese data disappoint the bulls. If you’re a bear on the pair, look out for that scenario to play out before shorting the pair. If you’re a more aggressive trader, it’s probably best to consider scaling into your full position rather than going all in in case we see positive surprises in the economic data.
If you’re bull, a case can be made that this broken support level may draw in buyers if we see positive surprises from Australia and China. We’ve also got trade talks resuming between the U.S. and China, and any positive developments there would likely draw in more Aussie bulls short-term.
