We’ve got another solid dose of Australian and Chinese updates coming soon, making the Aussie one to watch through the next session. GBP/AUD makes the top of the list as the market retests the top of a range, set to potentially make moves on the data.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD ahead of euro zone economic updates, 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:
- US home prices rose 3.9% annually, up from 3.7% in December, according to the S&P CoreLogic Case-Shiller Indices
- Treasury yields edge higher as investors eye coronavirus tally, China PMI rebound
- Chicago PMI slips to 47.8 in March
- US consumer confidence drops in March to 120, vs 110 expected
- Canadian Real gross domestic product edged up 0.1% in January
- Prices for products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), decreased 0.5% in February
- In March 2020, French consumer prices increased by 0.6% year on year
- In January 2020, French sales volume in overall trade recovered (+0.9% after −0.6% in December 2019
- UK business confidence crashes on coronavirus hit: Lloyds
- UK economic growth flatlined even before coronavirus hit country
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Australia Manufacturing PMI at 10:00 pm GMT
- Japan Tankan Manufacturing & Services Index at 11:50 pm GMT
- Australia Building permits at 12:30 am GMT (Apr. 1)
- Japan Jibun Bank Manufacturing PMI at 12:30 am GMT (Apr. 1)
- RBA Meeting Minutes at 1:30 am GMT (Apr. 1)
- China Caixin Manufacturing PMI at 1:45 am GMT (Apr. 1)
What to Watch: GBP/AUD
We’ve got low-to-mid tier economic reports coming from both Australia and China, which could add volatility to GBP/AUD if we see actual numbers come in very different from current expectations. The Chinese private manufacturing PMI update will likely be the most watched number out of the bunch, likely to have the same global risk sentiment effect as today’s manufacturing PMI update from the government.
In terms of price action, the pair has been stuck in a range between 1.9600 – 2.0350, the top of which is being retested as we speak. And with the stochastic indicator showing potentially overbought conditions, there’s a pretty strong technical argument for a reversal back to the downside if this resistance area holds.
Of course, whether it breaks or not depends on the upcoming updates, so it’s likely a good idea to wait for better-than-expected economic updates from China and Australia before considering a short position. If you are more aggressive and look to short at current levels ahead of the data, remember to keep positions small and that the daily ATR is around 400 pips, so set exit points accordingly. If using the daily ATR as a stop guide, then targeting the bottom of the range makes for a pretty strong potential return-on-risk.
If your’e a bull on GBP/AUD, it’s probably a good idea to wait for an upside breakout on weak economic updates, and/or negative coronavirus related news reports before taking a short-term long position in the pair. If this scenario plays out, it may be worth looking into building a longer-term position as the trend has been higher in GBP/AUD on the higher time frames.