The Reserve Bank of Australia’s latest interest rate decision will be coming very soon, likely to light a fire for short-term Aussie fireworks.
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:
- Australia New Home sales at 12:00 am GMT (June 2)
- U.S. Total Vehicle sales at 12:00 am GMT (June 2)
- Australia Business inventories, Current account at 1:30 am GMT (June 2)
- RBA Interest Rate Decision at 6:30 am GMT (June 2)
What to Watch: AUD/USD
On the one hour chart above of AUD/USD, we can see an upside break of an ascending triangle pattern over the past couple of sessions.
This tends to draw in momentum buyers, especially in longer-term uptrends, like the one we’ve seen in the pair since mid-March.
This could be the start of another leg higher, sustained by continuing positive global risk sentiment (supported by lockdown easing and COVID-19 therapies/vaccine developments) and the expectation that the RBA will not ease any further at their upcoming meeting, hinted at their last meeting in May.
So, if you’re a bull on the pair, consider entering into long position from current levels break down to the ascending triangle resistance (around 0.6685) is a valid option, although if you’re the more conservative, scaling in heavier closer to the break (or maybe waiting for a retest) makes more sense given the top tier event ahead.
If you’re a bear on the AUD/USD, possibly on a surprise negative tone from the RBA and/or a shift in global risk sentiment (e.g., escalating U.S.-China tensions, rising U.S. civil unrest, negative coronavirus developments), then a break below the rising ‘lows’ is the signal to watch before considering a short position.
It’ll likely take both scenarios for this price action to play out, but if it does, the momentum lower could be high given the extent of the recent rally in risk assets.