Global risk sentiment is on the upswing to start the new week, and with RBA monetary policy meeting minutes ahead, this downtrend in GBP/AUD is one to watch for potential short-term opportunities.
Is the intraday move exhausted and ready to pull back, or will the momentum keep the pair moving lower?
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Fresh Market Headlines & Economic Data:
- Stock futures add to gains on vaccine hope as open nears, Dow futures now up 700 points
- Moderna reports positive data on early-stage coronavirus vaccine trial, shares surge
- U.S. Homebuilder sentiment bounces back in May, after record plunge in April
- Powell says GDP could shrink more than 30%, but he doesn’t see another Depression
- Oil jumps 9% to $32 as June futures contract nears expiration
- Gold prices jump, rally toward highest close in about seven years
- Trump Aide Accuses China of Using Travelers to ‘Seed’ Virus
- ECB’s Lane: Euro zone economy won’t hit pre-crisis level until 2021 at earliest
- Bank of England looking more urgently at negative rates, riskier assets: Haldane
- SNB Kept Up Currency Buying Amid Persistent Pressure on Franc
- ANZ economists now predict the Reserve Bank will increase the quantitative easing programme to $90 billion by August if not sooner
- Japan’s GDP shrinks at 3.4% pace in January-March
- China’s President Pledges $2 Billion for Coronavirus Pandemic
Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:
- New Zealand Producer prices at 10:45 pm GMT
- Australia Monetary Policy Meeting minutes at 1:30 am GMT (May 19)
- Japan Industrial Production at 4:30 am GMT (May 19)
What to Watch: GBP/AUD
With the possibility of negative interest rates from the Bank of England smacking Sterling lower, and positive global risk sentiment likely lifting the Aussie, it’s been a great start to the new week for GBP/AUD bears.
And with a relatively light economic calendar for the rest of the U.S. session and Asia session, that trend may continue.
But we do have a potential catalyst from Australian that may spark some volatility in the Aussie later in the form of the minutes from the latest Reserve Bank of Australia monetary policy meeting.
This is not usually a big mover, but if we do see a commentary outside of expectations (RBA members see GDP at 6% in 2020, with the unemployment rate remaining at 7.5% through 2021) then that’s where traders may take short-term action.
But for now, it looks like the bears are in solid control, and if you’re looking to ride the trend lower, then you have a few options to play the trend. For the more aggressive, consider scaling into a short position from current levels up to the broken support area around 1.8900.
ith the daily ATR around 200 pips, it’s very possible to reach that area within a session. For the more conservative traders out there, waiting for a retest of that 1.8900 area is probably more for you.
If that scenario plays out, a break above the falling ‘highs’ pattern marked on the one hour chart above should be the signal to draw in momentum buyers. At that point, watch for a hold above 1.8900 before building a long position.