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AUD/USD hits the top of the watchlist for the session as the pair leans bearish with the global markets gives us negative vibes.

Equity Markets Bond Yields Commodities & Crypto
DAX: 11872.88 -0.64%
FTSE: 6031.83 -1.20%
S&P 500: 2995.53 -1.51%
DJIA: 25116.26 -1.91%
US 10-yr 0.669% -0.03
Bund 10-YR -0.4514% -0.006
UK 10-YR: 0.197% -0.011
JPN 10-YR: 0.003% -0.009
Oil: 35.12 -3.14%
Gold: 1722.70 -0.84%
Bitcoin: 9192.21 -1.56%
Ethereum: 224.25 -3.41%

Fresh Market Headlines & Economic Data:

Beijing Locks Down Part of City After Virus Outbreak at Market

Empire State index shows stable conditions in June after two months of record declines

Canadian Manufacturing sales fell by a record 28.5% to $36.4B in April, following a 9.8% decline in March.

Canadian home sales rebound by a record 56.9% in May: CREA

China May industrial output rises 4.4%, lags forecast, retail sales down 2.8%

Oil Extends Losses on Fears Second Virus Wave Will Hit Economy

Euro area international trade in goods surplus €2.9B; €0.2B surplus for EU

Brexit: Johnson and von der Leyen in crunch EU-UK talks

EU and UK agree to speed up Brexit trade talks with the transition period expiring in six months

Swiss Producer and Import Price Index fell in May 2020 by 0.5%

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

U.S. Net Long-Term Tic Flows at 8:00 pm GMT

RBA Meeting Minutes at 1:30 am GMT (June 16)

Australia House Price index at 1:30 am GMT (June 16)

What to Watch: AUD/USD

AUD/USD 1-Hour Forex Chart
AUD/USD 1-Hour Forex Chart

As we can see in the broad market snapshot above, everything looks pretty much down in the dumps as we start the new week, likely on rising coronavirus cases sparking fears of a second pandemic wave.

Safe haven assets like the U.S. dollar are on the upswing while risk assets have seen nothing but red on the session, including the Australian dollar, which is possibly feeling additional pain from the negative data out of its close trading partner, China, during the Asia session.

Going forward, the fresh trend lower may see further action with catalysts from Australia in the upcoming Asia session, including the minutes from the latest RBA monetary policy meeting, as well as Australian House price data.

For the bears on AUD/USD, negative outcomes from the Australian events could spark further selling in AUD/USD. If we do see disappointing data, watch out for reversal patterns from current levels up to the strong area of interest around the 0.6900 area. It’s served as both support and resistance in this month, so it’s likely traders will be watching it closely as an area of execution.

For the bulls on AUD/USD, with risk sentiment negative at the moment, it’ll likely take a combination of both positive Aussie catalysts and a shift back to positive in global risk sentiment before traders start buying up the pair. In that scenario, a break/retest/hold above 0.6900 makes sense as a buy signal, but don’t rule out another retest of 0.6800 ahead of the event.

In that scenario, watch for another round of support and upside pop as a signal to take a short-term long position. This scenario would be a solid return-on-risk for a swing trade setup if using the daily ATR (around 100 pips) as a stop guide and last week’s highs as a max target.