With risk sentiment swinging positive and oil taking a hit on inventory data, this consolidation breakout on AUD/CAD is one to watch for quick pips or possibly even a swing trade.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on USD/JPY for a technical play, so be sure to check that out to see if there is still a potential play!
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 10316.02 +2.39% FTSE: 5688.18 +1.90% S&P 500: 2710.75 +1.77% DJIA: 23179.68 +2.20% |
US 10-yr 0.734% +0.00 Bund 10-YR -0.323% -0.009 UK 10-YR: 0.376% -0.036 JPN 10-YR: 0.007% +0.009 |
Oil: 24.68 +4.44% Gold: 1687.40 +0.22% Bitcoin: 7264.79 +1.25% Etherium: 168.80 +2.92% |
Fresh Market Headlines & Economic Data:
- WTO sees ‘ugly’ trade plunge, likely worse than financial crisis
- Pelosi, Schumer call for another $500B-plus as part of ‘interim’ coronavirus relief bill
- EIA reports a weekly decline in U.S. oil output, but crude supplies climb by more than 15 million barrels
- The value of building permits issued by Canadian municipalities fell 23.2% to $1.4B when compared with March 2019
- The trend in Canadian housing starts was 204K units in March 2020 vs. 209K units in February 2020
- EU Fails to Agree on 500 Billion-Euro Response to Virus Crisis
- Spain hits 14,500 coronavirus deaths, big economic slump forecast
- UK PM Johnson ‘clinically stable’ in intensive care battling COVID-19
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- FOMC Meeting minutes at 6:00 pm GMT
- U.K. House prices at 11:01 pm GMT
- BOJ Governor Kuroda speech at 12:30 am GMT (Apr. 9)
- RBA Financial Stability review at 1:30 am GMT (Apr. 9)
What to Watch: AUD/CAD
On the one hour chart above of AUD/CAD, we can see the pair has formed a symmetrical triangle over the past week, consolidating around the 0.8600 -0.8700 range.
Today, it looks like a potential upside break of the triangle, likely due to the recent positive global risk sentiment (likely on hopes pandemic is peaking) and possibly on Loonie weakness sparked by weak oil prices in the past session as inventory continues to grow.
So, if you’re a bull on AUD/CAD, this break could be the technical signal for a long position if you feel the current weak oil story and positive global risk sentiment will continue. We do have the RBA’s financial stability review to look ahead to for a potential short-term boost in volatility, but the odds of that are pretty low unless we see rhetoric other than weak conditions given the current global pandemic environment.
So, there’s likely further upside and if you’re looking to turn this into a swing trade, watch out for tomorrow’s OPEC meeting and whether or not an production cut is agreed to.
If you’re a bear on AUD/CAD, a potential scenario for watch out for for a swing trade is a break below the symmetrical triangle on news of an OPEC agreement, especially if the production cut is more than 10M barrels per day.
This is a low probability scenario as the agreement depends on whether or not the U.S. will join, but that low expectation is also the reason this could be a big boost for the Loonie if that scenario plays out as traders will likely flip their biases quickly.