Daily U.S. Session Watchlist: GBP/AUD

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

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

GBP/AUD 1-Hour Forex Chart

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.