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The Aussie has been on a tear against Sterling lately; will today’s bounce higher in GBP/AUD draw in more sellers? Will upcoming Aussie data keep the momentum going?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on  USD/CHF ahead of the Swiss GDP update, 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:

ISM non-manufacturing activity index rose to a reading of 45.4 last month from 41.8 in April

US Private payrolls decline by 2.76 million in May, ADP says, a much smaller drop than feared

US Mortgage demand from home buyers jumps 18%, as interest rates set another record low

Canadian Labour productivity rises 3.4% q/q as hours worked fall faster than output

Eurozone PMI rises in May but still signals severe contraction

Coronavirus pushes up German unemployment, short-time work

Bank of England reminds banks of ‘no deal’ Brexit risk

UK Services PMI: 29.0 in May vs. 13.4 in April, still well below the 50.00 expansion mark

Oil falls from $40 on doubts over early OPEC meeting

Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:

  • Australia Trade balance & Retail sales at 1:30 am GMT (June 4)
  • UK-EU Brexit Talks All day (June 4)

What to Watch: GBP/AUD

GBP/AUD 1-Hour Forex Charts
GBP/AUD 1-Hour Forex Charts

Like most other Aussie pairs, GBP/AUD has been on a steady trend favoring the Australian dollar, likely due to the “reopening trade” and not-so-bad economic updates from Australia. And today, we could be seeing another opportunity, at least in the short term, for traders to play that trend at better prices.

Looking ahead, we’ve got more economic updates from Australia to likely keep the action going, this time in the form of the latest trade balance data and retail sales data. If the recent trend of “not-so-bad” updates continues, then it’s possible these events could help the Aussie higher. We’ll have to wait-and-see.

On the one hour chart above, we can see the pair recently bounced from the 1.8100 handle earlier in the Asian session, but the bears seemed to have taken that as an opportunity to sell more around the 1.8300 handle, which happened to be the 61% Fibonacci retracement area.

The downside momentum has already picked up in the U.S. trading session, so for you short players out there, this may be the time to grab some pips.

Scaling in from current levels up to the Fib area / falling trend line makes sense for the more conservative types, while for the more aggressive, a full position around current levels is something to consider.

For the GBP/AUD bulls among us, a long position shouldn’t be considered unless we get a combination of both negative global risk sentiment flows and weaker-than-expected Australian data updates.

If that scenario plays out, watch out for a break above 1.8300 before considering a long position.

Or if the pair makes its way lower from here, any bullish reversal patterns around the 1.8000 major psychological handle could be the signal the tide could turn in the short-term.