A potentially busy day ahead for Aussie traders with the latest rate statement from the Reserve Bank of Australia, as well as Australian data coming soon. We’re checking out AUD/USD for potential setups with recent support and resistance areas clearly laid out.
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 12871.92 -0.30%
FTSE: 7247.46 -1.14%
S&P 500: 3028.13 -0.61%
DJIA: 26973.43 -0.78%
|US 10-yr 1.775% +0.047
Bund 10-YR -0.352% +0.025
UK 10-YR: 0.702% +0.038
JPN 10-YR: -0.185% -0.043
|Oil: 57.12 +1.64%
Gold: 1516.20 +1.30%
Bitcoin: 9312.29 +1.30%
Etherium: 186.92 +3.13%
Fresh Market Headlines & Economic Data:
- U.S. May Not Need to Put Tariffs on European Cars, Ross Says
- Fed’s Kashakri calls for no more rate hikes until inflation hits 2%
- UK Construction output falls at slower rate in October
- IHS Markit Eurozone Manufacturing PMI (final data): PMI little-changed at seven-year low in October
- Sentix investor confidence improves in November to -4.5 vs. -16.8 in October
- Australia Retail Sales rises by 0.2% m/m in September vs. 0.4% in August
- Australia job ads fall in October to 2.5-year low: ANZ
- Swiss Consumer sentiment: expectations regarding the Swiss economy deteriorating
Upcoming Potential Catalysts on the Forex Calendar:
- Australia Services index at 9:30 pm GMT
- New Zealand Commodity prices at 12:00 am GMT (Nov. 5)
- U.K. Retail sales monitor at 12:01 am GMT (Nov. 5)
- China Caixin Services PMI at 1:45 am GMT (Nov. 5)
- Reserve Bank of Australia Rate statement at 3:30 am GMT (Nov. 5)
- U.K. Services PMI at 9:30 am GMT (Nov. 5)
- Euro area PPI at 10:00 am GMT (Nov. 5)
- Canada Trade Balance at 1:30 pm GMT (Nov. 5)
- U.S. Trade Balance at 1:30 pm GMT (Nov. 5)
- U.S. ISM Services PMI at 3:00 pm GMT (Nov. 5)
What to Watch: AUD/USD
In the upcoming Tuesday Asia session, we’ve got one of the top FX catalysts of the week coming in the form of the latest monetary policy and interest rate statement from the Reserve Bank of Australia. Expectations are for the RBA to hold off on any further rate cuts for now, so it’s likely the big action is only to come if there is a surprise rate cut from the current 0.75% overnight interest rate.
In the case where we the RBA does hold, volatility is still likely to pick up for Aussie pairs given the other economic catalysts from Australia during the session, which could present a swing opportunity for bulls on AUD/USD. AUD/USD bulls have benefited from both positive U.S.-China trade developments and FOMC rate cuts, stories that should persist this week. So, the odds are on the bulls side and if the RBA statement comes in as expected, an interesting setup to watch out for is a retest of the 0.6880 area that was once resistance, now turned support as recent as the end of October.
If that area is retested and we see bullish reversal candles form after the event, that would be a signal to get interested in both a short-term or swing move. Given the daily ATR of around 40 – 45 pips, a move from the 0.6880 area to recent swing highs around 0.6930 is a doable move in the short-term.
For the bears, it’s possible for AUD/USD to fall after the RBA event on a “buy-the-rumor, sell-the-news” situation as an interest rate hold could have been priced in advance. If a sell-off does appear and we see a break-and-retest below the 0.6880, a short-term opportunity could be in the works, but likely only in a scenario where we get negative geopolitical headlines (e.g., U.S.-China trade negativity).
If this scenario develops, targeting the previous swing lows around 0.6820 is also a viable short-term opportunity given the daily average true range. Also keep in mind that this pair is in a very long down trend on the higher time frames (down 1200 pips / -15% since Jan. 2018), so for you position traders out there, this could be another shot at playing that trend.