GBP/AUD is likely the top market mover for the next session, not only on U.S.-China trade news, but also on economic data ahead from the U.K., China and Australia.
Intermarket Snapshot
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Fresh Market Headlines & Economic Data:
- Wall Street jumps after U.S. to delay some China tariffs
- U.S. inflation accelerates; Fed rate cut still expected
- China’s vice premier talks with U.S. trade officials – Commerce Ministry
- China paints rosy picture of foreign investment despite Donald Trump’s claim ‘thousands’ of firms are leaving
- UK jobs market shines, but clouds on horizon
- Recession fears in focus as German investor morale nosedives
- Japan producer prices fall -0.6% year-over-year; unchanged month-over-month at 101.2
- Japan Indices of Tertiary Industry Activity falls -0.1% m/m to 106.9 (seasonally adjusted)
- Australia business conditions subdued in July: survey
- New Zealand food prices rose 1.1% in July 2019; +0.7% seasonally adjusted
- SEC again delayed decisions on three bitcoin ETFs, setting new deadlines in September and October
Upcoming Potential Catalysts on the Forex Calendar:
- Japan core machinery orders at 12:50 am GMT (Aug. 14)
- Australia consumer sentiment at 1:30 am GMT (Aug. 14)
- Australia wage price index at 2:30 am GMT (Aug. 14)
- China industrial production, retail sales & unemployment rate at 3:00 am GMT (Aug. 14)
- German GDP at 7:00 am GMT (Aug. 14)
- U.K. inflation at 9:30 am GMT (Aug. 14)
- Euro area flash GDP & employment, industrial production at 10:00 am GMT (Aug. 14)
What to Watch: GBP/AUD
Looking at the upcoming potential catalysts above, it looks like Sterling and Aussie traders have plenty to look forward to with China, Australia and the U.K. set to release a slew of economic updates. This makes GBP/AUD a likely candidate for increased volatility, which is already on the move after this morning’s surprise announcement from the U.S. that some items from China tariff list will be removed & delaying tariffs for others. This headline kicked traders into risk-on mode, which is likely we’re seeing a spike lower in GBP/AUD.
So, with volatility likely to stay bid, there are a couple of setups to look out for on GBP/AUD. The pair has been in a range over the past month or so, trading between 1.7900 – 1.8100 on the top end and around 1.7650 on the bottom. Those are the two areas two watch for a possible continuation of the range, or a breakout if we see big surprises from the upcoming data.
If you’re a bear on GBP/AUD, a retest of the top of the range after bullish China / Australian data should be the signal to play the range once again, or a retest on the bottom of the range on a combination of weak U.K. inflation and positive Asia region data should be your cue to be on the lookout for a downside breakout.
For the bulls, a test of the bottom of the range is pretty likely at the moment given the downside momentum, and it will likely take both bad Australia / China data and good U.K. inflation data to draw in the bulls once again to hold 1.7650 as support. A negative update on the U.S.-China trade war story is also a strong catalyst for a bullish move on this pair, but after today’s announcement, it’s highly unlikely we’ll see something like that in the next session or two.