We’ve got a light economic calendar ahead through the rest of the U.S. session and Asia, but fortunately, Australia’s economic updates could provide a small spark of volatility for forex traders to watch out for. And the strong technical setup in AUD/NZD may be one of the best ways to play any potential Aussie moves.
Before moving on, ICYMI, we’ve started doing a Daily London Session Watch list! And today, we looked at a potential move in EUR/CAD, so be sure to check that out. For all you traders out there who trade the London session, be sure to check out the site daily for the latest news updates and pairs that could be on the move for the session!
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Fresh Market Headlines & Economic Data:
- Canada’s Ivey Purchasing Manager’s Index dips further into contractionary territory with a 48.2 reading in October vs. 48.7 in September
- Oil prices fall on U.S. crude build, euro zone data
- Fed’s Evans: Current interest rate would not withstand shock
- U.K.’s Johnson begins election battle, vowing Brexit and casting rival as ‘Stalin’
- German factory orders rise in September after two declines
- IHS Markit Germany Services PMI: Service sector growth remains subdued amid ongoing weakness in demand
- IHS Markit Eurozone Composite PMI: Euro area remains close to stagnation as new work falls again
- French activity growth accelerates amid faster rise in demand
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Australia AIG Construction Index at 9:30 pm GMT
- Australia Trade Balance at 12:30 am GMT (Nov. 7)
What to Watch: AUD/NZD
With another potentially quiet session ahead from the economic and geopolitical news front, forex volatility spikes may few and far between for the time being. But we do have economic updates coming from Australia in the form of trade balance data and construction sentiment to potentially get the Aussie moving.
And we like the setup on AUD/NZD as a way to play any Aussie action we may see, especially if there is a bearish reaction to the upcoming events. On the one hour chart above, we can see the pair just retested a major resistance area, which happens to be the 2019 highs just above 1.0800. And it didn’t take long for the bears to take back control as we’re already seeing bearish reversal behavior forming in the last session.
So, for the aggressive bears on AUD, shorting from current levels up to the 1.0840 area is an entry strategy to consider, but for the more conservative types, a retest at 1.0820 may be a more prudent way to enter. Given the daily ATR of around 50 pips, targeting the minor psychological level of 1.0750 is a reachable short-term target that gives an attractive potential R:R in the short-term.
For the bulls out there, if we get better-than-expected Australian data and a bullish reaction in Aussie pairs, a break above the 2019 highs could draw in momentum buyers, and a setup for the more aggressive traders out there would be to buy on the break. Without any near term resistance beyond that, there could be a solid run higher if we a really big positive surprise. For the more conservative traders, a pullback to 1.0800 and hold there is behavior to consider for a swing position.