What’s up forex friends! We’ve got AUD/USD at the top of the watchlist today as it consolidates ahead of potential catalysts from Australia and China!
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on USD/CHF ahead of U.S. jobs data, so be sure to check that out to see if there is still a potential play!
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 10615.90 -1.06% FTSE: 5852.21 +2.79% S&P 500: 2872.45 +0.16% DJIA: 23887.38 +0.04% |
US 10-yr 0.741% +0.084 Bund 10-YR -0.51% +0.068 UK 10-YR: 0.242% +0.036 JPN 10-YR: -0.019 +0.02 |
Oil: 23.51 -4.28% Gold: 1694.90 -0.91% Bitcoin: 9239.46 2.96% Etherium: 208.04 +1.66% |
Fresh Market Headlines & Economic Data:
- Wall Street climbs on hopes of easing restrictions
- Oil falls to $30 as supply glut counters lockdown easings
- US private payrolls drop by 20.2M in April, the worst job loss in the history of ADP report
- Eurozone economy services busines activity index drops to 12.0, a record low
- German factory orders was down -15.6% in March m/m
- Decline in German business activity deepens to new record low in April
- In March 2020, Volume of retail trade down by 11.2% in euro area; Down by 10.4% in EU
- EU predicts region will contract 7.4% this year in worst economic shock since 1930s
- Survey-record decline in UK construction work amid site closures due to COVID-19 pandemic
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Fed Bostic speech at 5:30 pm GMT
- Australia Services Index at 10:30 pm GMT
- UK GfK Consumer confidence at 11:01 pm GMT
- Australia Trade Balance at 1:30 am GMT (May 7)
- China Caixin Services PMI at 1:45 am GMT (May 7)
- China Trade Balance 3:00 am GMT (May 7)
What to Watch: AUD/USD
After last week’s drop from 0.6570 and this week’s bounce from 0.63070, AUD/USD has been chillin’ like a villain in a tight range between 0.6420 – 0.6460.
There hasn’t been much to shake up the markets over the last couple of days, but the upcoming Australian and Chinese economic updates could turn this consolidation into a breakout setup.
For the bears out there, the technical picture plays into your favor as we just saw resistance around the Fibonacci retracement area / minor psychological level of 0.6450. Stochastic seems to nearly be testing overbought conditions, so the argument is that we may see a reversal soon in AUD/USD.
If the upcoming Australian and Chinese data comes net weaker-than-expected, look out for bearish candlestick patterns before considering a short position in the pair.
And with a daily ATR of around 90 pips, the area between previous swing low (0.6370) to the minor psychological level of 0.6350 is a reachable target if AUD/USD volatility picks up.
For the bulls in the house, a net positive turn could spark a bullish reaction in AUD/USD, at which point the signal to start putting together a long position plan could be an upside break of the falling ‘highs’ around the 38% Fibonacci retracement level.
The previous swing high around 0.6570 is reachable within a few sessions, so this is a setup for swing traders looking to play the current risk-on drivers (i.e., slow re-opening of economies around the world).
