AUD/CAD is set to be very active in the upcoming session with a top economic indicator from Australia and the Bank of Canada’s latest monetary policy statement coming soon.
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Fresh Market Headlines & Economic Data:
- UK government will accept opposition amendment to hold election on December 11: BBC
- U.S. pending home sales increase more than expected
- S&P CoreLogic Case-Shiller National Home Price Index rises 0.21% m/m
- U.S. auto sales seen dipping 1.3% in October: J.D. Power, LMC Automotive
- The CB U.S. Consumer Confidence Index decreased marginally in October to 125.9, down from 126.3 in September.
- SNB’s Schlegel sees scope to cut negative rates further
- Yuan firms on encouraging progress in Sino-U.S. trade talks
- Oil slips to $61 on OPEC+ doubts
- U.K. consumer credit muted in September amid Brexit uncertainty
- U.K. Annual house price growth remained subdued at 0.4%
- RBA may ease further but negative rates unlikely, Lowe says
- Japan Tokyo core CPI: +0.5% y/y, +0.7% m/m
Upcoming Potential Catalysts on the Forex Calendar:
- Japan Retail sales at 11:50 pm GMT
- Australia Inflation & New home sales at 12:00 am GMT (Oct. 30)
- Euro area sentiment data at 10:00 am GMT (Oct. 30)
- U.S. Mortgage applications at 11:00 am GMT (Oct. 30)
- U.S. ADP Employment change at 12:15 pm GMT (Oct. 30)
- U.S. GDP & PCE prices at 12:30 pm GMT (Oct. 30)
- Bank of Canada Monetary policy statement at 2:00 pm GMT (Oct. 30)
What to Watch: AUD/CAD
AUD/CAD is about to get popping with Australia’s CPI data set to release in the upcoming Asia session, and the Bank of Canada’s latest monetary policy statement coming in the Wednesday U.S. trading session. Australia’s CPI number is a quarterly one and a big input to the RBA’s monetary policy thought process, so it’s highly likely the Aussie will see some action, and of course, central bank statements are almost always super influential on currency behavior.
So, looking at the one hour chart above of AUD/CAD, we can see the pair has been somewhat ranging throughout October, moving sideways between .8900 – .9040. With expectations of the AU CPI number coming in weaker (based on falling sales prices from the latest AU manufacturing & services PMI reads) and the BOC to hold interest rates steady at 1.75%, odds are in favor of AUD/CAD bears, barring any surprise geopolitical headlines to hit the wires or negative oil news/price movements.
For the bears, a conservative entry strategy would be to wait for a retest of the top of the range to get the best potential R:R. If using the daily ATR of around 50 pips for a stop guide, shorting around .9000 gives a rough 2:1 R:R when targeting the bottom of the recent range. For the more aggressive, nibbling with small positions up to the .9000 levels is something to consider.
For the bulls on AUD/CAD, we’ll need to see a surprise uptick in AU CPI to get interested in a long position, but that would likely be short-lived as the expectations of the BOC holding the overnight interest rate remains pretty strong. It’ll likely take dovish comments from AUD/CAD to breakout to the upside, and IF both scenarios play out, we could see a move up to the .9050 – .9100 area by the end of the week.