Daily U.S. Session Watchlist: AUD/NZD

Top tier catalysts ahead for both the Kiwi and Aussie makes the downtrend in AUD/NZD one to watch for the upcoming U.S. & Asia sessions.

Intermarket Snapshot

Fresh Market Headlines & Economic Data:

• U.S. housing starts fall, building permits near 13-year high
• The Canadian Consumer Price Index (CPI) rose 2.2% on a year-over-year basis in February, down from a 2.4% gain in January.
• U.S.-Canada border to temporarily close to nonessential travel: Trump
• U.S. crude hits 18-year low as lockdowns spread
• Government bonds hammered as stocks resume slide
• ECB’S Holzmann: Monetary policy still has further to go
• ECB’s de Guindos says effects from coronavirus could last for weeks or months
• Euro area international trade in goods surplus €1.3B in January; €2.6B deficit for EU27
• Annual inflation down to 1.2% in the euro area in Feb; Down to 1.6% in the EU

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

• New Zealand GDP q/q at 9:45 pm GMT
• Japan Inflation, Foreign investment at 11:30 pm GMT
• Australia Employment & RBA Bulletin m/m at 12:30 am GMT (Mar. 19)
• Reserve Bank of Australia Monetary policy announcement at 3:30 am GMT (Mar. 19)

What to Watch: AUD/NZD

AUD/NZD 1-Hour Forex Chart

Up ahead, we’ve got the highly anticipated Australian employment update and an event with the Reserve Bank of Australia later in the Asia session, likely an announcement of quantitative easing for the first time ever in Australia. We’ve also got the latest GDP data from New Zealand to potentially shake up the Kiwi, but for AUD/NZD, it’s highly likely the events from Australia will be the main drivers.

The scenario to watch out for is if NZ GDP data disappoints / AU employment surprises positive and AUD/NZD pops higher leading up to / after the event. If so, resistance at broken minor support around 1.0150 may entice traders looking to play the lower ‘highs’ pattern going back to the beginning of March for a short play. If retested and holds, odds are pretty good that the trend lower will continue.

And when using the daily ATR (around 90 pips) as a stop guide, and the possibility of a strong downside move from the upcoming RBA event, the potential return on risk is very attractive with no major support ahead. In this case, rolling down stops and scaling into bigger positions is a trade management strategy to consider to keep risk low while maximizing the potential profit.

For the bulls in AUD/NZD, a combination of weak NZ GDP / strong AU jobs data and no QE actions from the RBA may spark and upside breakout of the falling ‘highs’ pattern.  But this is a very low probability scenario, which is why if it does materialize, the potential rally could be strong. If taking a long position, be very, very cautious around these events!