AUD/NZD bulls have been on a solid run higher, which may still have room to run depending on the upcoming data from New Zealand, Australia and China.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on a wedge pattern formation on USD/JPY , 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:
New Zealand Manufacturing Index at 10:30 pm GMT
RBA Governor Lowe speech at 11:30 pm GMT
Australia New Home Sales at 12:00 am GMT (Aug. 14)
China House price index at 1:30 am GMT (Aug. 14)
China Industrial production, Retail sales, Unemployment rate at 2:00 am GMT (Aug. 14)
Japan Tertiary industry index at 4:30 am GMT (Aug. 14)
What to Watch: AUD/NZD
As we can see on the one hour chart above, AUD/NZD has been on a slow grind higher as traders lean more on Australia’s recovery over rising coronavirus cases, versus the possibility of the RBNZ moving to negative interest rates down the road. These themes are likely to continue for now, but we’ve got some economic catalysts coming up that may influence traders to pull back from the uptrend or push it up further.
On the economic calendar for the Asia session, we’ve got a slew of potential catalysts for the pair, but the most notable would be the upcoming from RBA Governor Lowe and/or the economic updates from China. Any surprises there would likely spark volatility for the pair, and hopefully a strong bias one way or another.
For the bulls on AUD/NZD, positive rhetoric from the RBA and better-than-expected Australia / Chinese data is probably expected given the recent bounce in economic performance, so the odds are pretty good that the uptrend will continue. But after another move higher on today’s session, it’s probably a good idea to wait for a pullback to the rising trendline / broken short-term resistance (around 1.0900) before considering a long position.
For the more aggressive traders, scaling in from current levels starting with a small buy is an entry strategy that makes sense at the moment.
For the bears on AUD/NZD, is probably a good idea to wait for the data, and if we see negative rhetoric from the RBA and weaker-than-expected Australia / Chinese data, then that could draw in sellers if the surprise is way out of expectations.
A move back down to the area of interest around 1.0850 – 1.0870 is within the realm of probabilities given the daily ATR of around 60 pips, so if the market is still trading at current levels and this scenario plays out, the potential return-on-risk is favorable for a short-term trade.