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:
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
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.