AUD/USD makes it to the top of today’s U.S. session watchlist after a minor support break and news of a potential tariff delay hitting the markets. Will the bears stay in control for the rest of the session?
Before moving on, ICYMI, today’s Daily London Session Watch list looked at an opportunity forming on GBP/CAD ahead of further Sterling positive election polls, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
- Stock futures turn positive on report US and China are planning for a delay of December tariffs
- U.S. Small Business Optimism Sees Major Spike in November
- U.S. third-quarter labor costs revised down; productivity weak
- China steps up US soybean purchases as trade talks drag on
- China Nov new bank loans jump to 1.39 trln yuan, beat forecast; Broad M2 money supply in November grew 8.2%
- U.K. GDP flat in three months to October
- For the three months to October 2019, U.K. production output decreased by 1.5%, compared with the same three months to October 2018
- The total UK trade deficit widened £2.3B to £7.2B in the three months to October 2019
- German ZEW economic sentiment index rises sharply to 10.7 in December vs. -2.1 previous
- French industrial production up +0.4%, beating forecasts of +0.3%
- Italian industrial production down in October by 2.4% y/y, down 0.3% m/m
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- New Zealand Electronic retail card spending at 9:45 pm GMT
- Australia Westpac Consumer confidence at 11:30 pm GMT
- Japan Large Manufacturing sentiment & PPI at 11:50 PM GMT
What to Watch: AUD/USD
On the one hour chart above of AUD/USD, we can see the market breaking below a minor area of interest around the 0.6820 level, that has recent held as support over the last four sessions. And today, markets seems to be focusing on the news that there may be a delay of the December tariffs by the U.S. on Chinese goods, but based on the price action over the last hour or so, there seems to be a bit of skepticism over that news.
With broad risk sentiment leaning a little negative right now, the break in AUD/USD lower may be a signal that bears will jump on for short-term pips, that may gain steam with the upcoming Westpac Australian Consumer confidence around the corner. With recent data showing weakness (e.g., Australia building approvals nosedived by a shockingly large 8.1% in October, Australian retail sales flatline in October, Aussie manufacturing output hits 3-year low), odds are we may see the consumer not feeling so great as well.
So, a sell on AUD/USD is the higher probability play, with a disappointing consumer sentiment read as the catalyst to form a short idea. If so, the pair could revisit the previous swing low around 0.6760, which is attainable within a session or two given the daily ATR of around 40 – 45 pips.
Bulls may want to check out AUD/USD longs if we see a surprisingly positive consumer confidence number, as well as any positive developments on the U.S.-China trade war front. A break above the falling ‘highs’ (around 0.6840) should be considered for a short-term long position if the market can hold above, and with the next resistance area around 0.6890 – 0.6920, the potential return-on-risk looks very favorable, especially if global risk sentiment shifts positive this week.