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With risk sentiment in positive territory and potential catalysts from Australia and China ahead, the uptrend in AUD/USD is one to watch for the next session.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/AUD after more news of Australian lockdown measures, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 12578.23 -0.31%
FTSE: 6176.44 -0.22%
S&P 500: 3171.45 +0.83%
DJIA: 26105.98 +0.83%
US 10-yr 0.669%  +0.021
Bund 10-YR -0.439% -0.015
UK 10-YR: 0.179% -0.001
JPN 10-YR: 0.01% -0.026%
Oil: 40.80 +0.44%
Gold: 1822.70 +0.70%
Bitcoin:9431.00 +1.85%
Ethereum: 246.39 +3.13%

Fresh Market Headlines & Economic Data:

Dow jumps 200 points as Apple and Microsoft lead tech gains

U.S. Homebuyer mortgage demand spikes 33% as rates set another record low

Trump threatens to cut funding for schools, slams CDC reopening guidelines as too tough and expensive

Fed’s Mester says economic growth ‘leveling off,’ sees more help needed

Swiss unemployment rate fell from 3.4% in May 2020 to 3.2% in June

U.S. commercial crude oil inventories: +5.7M barrels from the previous week

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

Fed Bostic speech at 4:15 pm GMT
U.S. Consumer credit change at 7:00 pm GMT
Japan Machinery orders & M2 Money supply at 11:50 pm GMT
New Zealand Business Confidence at 1:00 am GMT (July 9)
Australia Home loans at 1:30 am GMT (July 9)
China Inflation rate at 1:30 am GMT (July 9)

What to Watch: AUD/USD

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

On the hourly chart above, we can see that after a rally higher over the past week, AUD/USD has settled into a range over the past few sessions. This calm is likely due to the environment being relatively quiet in terms of high impact market catalysts, but the action may pick up with Australian home loan and Chinese inflation data ahead.

For the bulls on AUD/USD, better-than-expected Australian and Chinese data could draw in buyers to the pair, and in this scenario, bullish patterns around the 0.6950 minor psychological level increase the probability of buying interest if retested before the numbers.

A long position there and targeting the major psychological level (0.7000) creates a decent short-term reward-to-risk if using the daily ATR (80 pips) or less as a stop guide.

An upside break on positive economic data and/or positive global risk sentiment is also a strong signal to draw in buyers, but you should consider waiting for a break-pullback-retest scenario of 0.7000 before building a long position.

For the bears on AUD/USD, it’ll likely take a combination of both weak Australian & Chinese updates and global risk sentiment flipping negative for a strong argument to be made to be short the pair.

If that scenario does develop, a break below the previous area of interest around 0.6930 could draw in market sellers for a momentum style trade. With a potential target around the previous strong support area around 0.6850, the potential R:R is also an attractive one for a day trade or short-term swing trade.