Checking out AUD/USD in the latest edition of the Daily Watchlist as it sets to move with Australian jobs data right around the corner.
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Fresh Market Headlines & Economic Data:
- US retail sales unexpectedly decline in sign consumer economy could be cracking
- Homebuilder confidence surges to highest level in nearly two years, thanks to lower mortgage rates
- U.S. business inventories unchanged in August
- Fed’s Evans says no more rate cuts are needed this year
- China threatens countermeasures in response to US bill supporting Hong Kong protesters
- Foreign investors acquired $5.0B of Canadian securities in Aug, following two months of divestment.
- Canadian CPI rose 1.9% y/y in September, matching August. Excluding gasoline, the CPI rose 2.4% for the third consecutive month.
- Falling petrol prices keep lid on UK inflation in September – ONS
- The annual price change for a property in the UK was 1.3% in August
- British PM will write letter to EU asking for Brexit delay if no deal by Saturday
- Irish PM says Brexit issues remain, EU sources report “standstill”
- Britain struggles on two fronts to agree last-ditch Brexit deal
- Annual inflation down to 0.8% in the euro area; Down to 1.2% in the EU
- Euro area international trade in goods surplus €14.7B; €12.1B deficit for EU28
- ECB’s Knot wants more wiggle-room around inflation target
- Australia Westpac-MI leading index plunges
- New Zealand quarterly CPI: +0.7% in Sept; 1.5% y/y
- New Zealand central bank says lower rates may be needed; annual inflation slows
Upcoming Potential Catalysts on the Forex Calendar:
- ECB Lane speech at 7:00 pm GMT
- U.S. Monthly Budget statement & Fed Beige Book at 7:00 pm GMT
- Fed Brainard speech at 8:00 pm GMT
- U.S. Net Long-Term Tic flows at 9:00 GMT
- RBA Debelle speech at 11:15 pm GMT
- Australia Employment at 1:30 am GMT (Oct. 17)
- U.K. Retail Sales at 9:30 am GMT (Oct 17)
- Euro area Construction output at 10:00 am GMT (Oct 17)
- Canada ADP Employment Change & Manufacturing sales at 1:30 pm GMT (Oct 17)
- U.S. Building permits, housing starts, & Philly Fed manufacturing index at 1:30 pm GMT (Oct 17)
- U.S. Industrial & manufacturing production, Capacity utilization at 2:15 pm GMT (Oct 17)
What to Watch: AUD/USD
Up ahead, we’ve got the monthly Australian employment data almost guaranteed to bring big volatility to the Aussie dollar, and with a pretty heavy economic release schedule for the U.S. ahead, the Greenback should see plenty of action as well. That automatically makes AUD/USD the pair to watch, especially with some pretty easily identifiable support and resistance levels to potentially play.
On the one hour chart above of AUD/USD, we can see that pair has been chopping around between 0.6700 to 0.6800, which actually goes back to the beginning of August. So the pair is in a strong ranging pattern, making the first strategy to come to mind a reversal trade at the top or bottom of the ranges. If the Aussie data and/or U.S. data doesn’t come out with huge surprises from current expectations (Read Forex Gump’s Aussie jobs Event Preview to catch up on what traders think we’ll get) then a retest/hold of either side is the setup to look out for.
If you’re a bull on AUD/USD based on the expectation of jobs improvement, then starting a long position around 0.6700 down to 0.6670 is a prudent entry with a favorable short-term potential return-on-risk if using the daily ATR of around 40 – 50 pips as an invalidation trigger and targeting the top of the range.
If you’re a bear on the Aussie and think that jobs data will disappoint (and spark further rate cut speculation by the RBA), then shorting at the top of the range around 0.6800 up to 0.6825 is the prudent entry strategy, which also is in line with the longer-term trend. A break of the 0.6670 – 0.6700 support area is also a viable trade idea since weak data would likely spark a bigger reaction, but it’s probably a good idea to keep the risk small if going that route as the pair is already down 50 pips this week leading up to the event.