We may have an opportunity to catch some short-term pips in AUD/USD for the next session or two as the pair is forming a potential consolidation/breakout setup on the one hour chart.
Will the upcoming catalysts from Australia be enough to draw in traders to get the pair moving?
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Fresh Market Headlines & Economic Data:
- Oil falls on concerns over storage, weakening economies
- China cuts key rate for second time this year, more easing likely
- U.S. Delays Some Tariff Payments, Leaves China Levies in Place
- Chicago Fed economic index takes recessionary plunge in March
- Canadian wholesale sales rose 0.7% to $67.5B in February, a third consecutive monthly gain.
- Canadian home prices climb in March, paced by Ottawa-Gatineau
- Euro zone trade surplus grows, with decline in China imports
- German Producer prices in March 2020: -0.8% on March 2019
- Euro area international trade in goods surplus €23.0 bn; €22.4 bn surplus for EU
- Spain seeks 1.5 trillion euro recovery fund using EU perpetual debt
- UK recovery after lockdown may be slowed by caution: BoE’s Broadbent
- UK shopping trips plummet and housing market freezes after lockdown
- SNB scaled back FX intervention as coronavirus fears ebbed, data suggest
- New Zealand CPI +0.8% q/q in March, +2.5% y/y
- Japan exports slump as coronavirus hits U.S., Chinese demand
- Japan to boost stimulus to $1.1 trillion as virus threatens deeper recession
- China’s fiscal revenue plunges 26.1% as virus ravages economy
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- RBA Meeting minutes at 1:30 am GMT (Apr. 21)
- RBA Governor Lowe speech at 5:00 am GMT (Apr. 21)
What to Watch: AUD/USD
No major catalysts ahead for the rest of the U.S. session, so we’re looking towards the Asia session for potential action. This time coming from Australia, we’ll get the RBA’s latest meeting minutes and a speech from Governor Philip Lowe.
No major announcements or insights from what we already know is expected, but if we do get a surprise, it’ll likely be a big market mover for the Aussie in the short-term.
So we’re looking for a surprise from Australia for a quick move in the Australian dollar, and that may be best played in AUD/USD as the pair consolidates at the moment.
On the one hour chart above, we’re seeing lower ‘highs’ and higher ‘lows’ converging towards the 0.6375 handle, so if momentum picks up quickly, look out for a break of those patterns with a fresh catalyst before taking a short-term position on the pair.
For the bulls, a less dovish RBA minutes or Lowe speech with a break above the 0.6400 handle could draw in buyers, and with a daily ATR of around 160 pips at the moment, a move up to the previous swing high around 0.6450 (or even 0.6500) is not out of the question for the short-term.
This is somewhat of a higher probability setup given that fresh China stimulus news (China cuts key rates) could support the Aussie in the short-term in the form of positive risk-on influences.
For the bears, commentary that we’ll get even more stimulus from the RBA or that the economic outlook will continue to worsen may put pressure on the Aussie, and it may even draw in USD bulls on safe flows.
But this rhetoric is likely already priced in, so it would have to be pretty terrible news for the AUD/USD to have a significant break below the rising ‘highs’ (especially given the trend is higher now).
Also, an exogenous catalyst could come in the form of more weak global economic data / projections being released, and/or an acceleration in coronavirus cases/deaths.
