Australian dollar strength continues in today’s session, and with top tier economic data coming from Australia soon, will the party keep going for Aussie bulls?
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/NZD ahead of mid-tier UK data, 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:
- Oil turns positive, reversing more than 20% loss in early trading
- U.S. Home prices were gaining serious strength just before coronavirus shutdown, up 4.2% annually per Case-Shiller
- U.S. goods trade deficit rises as auto exports tumble
- The Conference Board Consumer Confidence Index for the U.S. fell to 86.9 in April, down from 118.8 in March
- The Richmond Fed composite index plummeted from 2 in March to −53 in April, its lowest reading and largest one-month drop on record
- Virus-hit Spain’s jobless rate jumps to 14.4 percent
- French consumer confidence sees record April fall
- French PM says it’s time to emerge from virus lockdown
- UK not ready to change social distancing measures: PM Johnson’s spokesman
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- API Crude oil inventory at 8:30 pm GMT
- New Zealand Trade Balance at 10:45 pm GMT
- Australia Inflation at 1:30 am GMT (Apr. 4/29)
What to Watch: AUD/USD
Global risk sentiment continues its upswing today with traders feeling the good vibes as economies around the world plan to re-open after an extended coronavirus lockdown.
This has benefited the Australian dollar as it tends to trade as a proxy to global risk sentiment and hurt the Greenback, the usual “safe haven” play. But will the trend higher continue?
Well, we’ve got top tier data from Australia in the form of the latest inflation update, so volatility is likely to pick up again for the Aussie soon, but it may be a good idea to wait for the actual numbers before shifting your bias one way or another on the AUD/USD pair.
For the bulls, a better-than-expected inflation read from Australia may draw in further AUD buying, at which point the pair looks like a buy from current levels (around 0.6500) down to the minor psychological level around 0.6450 where the pair consolidated in the last few sessions.
This area also lines up with the rising ‘lows’ pattern marked on the one hour chart above, and if we see Stochastic back in oversold territory in this scenario, the odds improve of support holding on the pair in the short-term.
For the bears, a disappointing inflation update could take the legs out of the Aussie rally in the short-term, and if we see a break below the rising ‘lows’ pattern marked above, it may be a good time to consider a short position in the pair, especially if global risk sentiment shifts back towards negative.
Keep in mind too that tomorrow is a big day for the Greenback with the latest FOMC statement coming, so it’s probably a good idea to keep a trade in this pair short-term or ready for a potentially big move in the Greenback tomorrow.
