AUD/CAD broke to the downside today after a disappointing Australian employment update, but will the move still have legs after the upcoming data from Canada?
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Fresh Market Headlines & Economic Data:
- Bank of England holds monetary policy but forecasts low interest rates for longer
- Swiss National Bank leaves base rate unchanged while cutting growth and inflation view
- Japan central bank stands pat after Fed rate cut
- Employment in Canada Increased by 49,300 Jobs in August 2019
- Australia net employment +34.7K in August but unemployment rate ticks up to 5.3%
- Philly Fed manufacturing index drops to 12.0 for September, but tops forecasts
- Oil prices rise as Saudi supply risks come into focus
- U.S. current-account deficit narrows 5.9% in second quarter
- US existing home sales rise to 17-month high in August
- UK retail sales drop unexpectedly in August
- In July 2019 the current account of the euro area recorded a surplus of €21B, compared with a surplus of €18B in June 2019
- ECB very close to crossing into fiscal policy, has safeguards: Coeure
- UK shares confidential documents with EU
- Coveney issues ‘dose of reality’ saying there is big gap on Brexit
- Trump: Fed Chairman Jerome Powell’s job is ‘safe’
- Global economy growing at slowest pace since recession, OECD says
- GDP data shows NZ economy continued to slow in June quarter
Upcoming Potential Catalysts on the Forex Calendar:
- Japan National CPI at 12:30 am GMT (Sept. 20)
- German PPI at 7:00 am GMT (Sept. 20)
- Canada Retail Sales at 1:30 pm GMT (Sept. 20)
- European Consumer confidence at 3:00 pm GMT (Sept. 20)
- Fed Rosengren speaks in New York at 4:20 pm GMT (Sept. 20)
- Fed Kaplan speech at 6:00 pm GMT (Sept. 20)
What to Watch: AUD/CAD
For the last watchlist post of the week we’re checking out AUD/CAD, which just posted a fresh downside move earlier in the session. This is off of the disappointing Australian employment data, which sparked bearish AUD sentiment that the RBA may push up their next rate cut to October rather than November. This move broke the rising ‘lows’ pattern on the one hour chart of AUD/CAD, which could draw the attention of momentum traders to possibly take it even lower with the right catalyst.
And that catalyst may possibly come from the upcoming Canadian retail sales data in the Friday U.S. trading session. Expectations are mixed, but with a recent positive read on employment earlier in the month, odds are probably better than even of a pick up in retail sales with more people in the workforce. Let’s also remember oil prices are on the rise as Saudi Arabia oil supply issues are still fresh on traders’ minds.
So, it’s more probable that the move will continue lower than higher, but be on the lookout for that CA retail sales number to beat first. And if it does, shorting from current levels up to the broken rising ‘lows’ pattern is a sensible entry strategy as it gives a favorable potential R:R if gunning for the September low area (0.8920 – 0.8950) and using the daily ATR (around 50 – 60 pips) as an exit guide.
For the bulls, it’s a tough argument right now with strong sentiment of an earlier RBA rate cut being priced in, but if Canadian retail sales strongly disappoints, then the area between 0.8950 – 0.9000 provides a favorable potential R:R if aiming for the September highs (around 0.9140) and using the daily ATR as a stop guide.