Daily U.S. Session Watchlist: AUD/CAD

Checking out this solid trend higher in AUD/CAD as risk sentiment remains positive and oil prices come under pressure this week.

Is today’s pullback a short-term opportunity to play the uptrend? 

Fresh Market Headlines & Economic Data:

China extends tariff exemptions on 16 US products for another year at the request of Chinese importers

U.S. manufacturing production increases in August

New York Manufacturing Index Jumps More Than Expected In September

U.S. import prices beat expectations in August as inflation warms up

Canadian Manufacturing sales increased for the third consecutive month, rising 7.0% to $53.1B in July. 

German ZEW investor sentiment rises despite Brexit, COVID-19 headwinds

UK jobless rate rise sounds warning for bigger job losses ahead

UK government won an initial vote on passing the Internal Market Bill to the next stage by 340 to 263.

Swiss Producer and Import Price Index fell in August 2020 by 0.4%

ANZ-Roy Morgan Australian Weekly Cosumer confidence ticks higher to 92.4 vs. 91.1 previous

Sydney and Melbourne house prices feel brunt of coronavirus downturn

New Zealand Consumer confidence hits lowest level since 2008

China’s industrial engine gathers speed, consumers open wallets in boost to recovery

Upcoming Potential Catalysts on the Economic Calendar

API Crude Oil stock change at 8:30 pm GMT
Japan Trade balance at 11:50 pm GMT
Australia New Home Sales at 12:00 am GMT (Sept. 16)
U.K. Inflation at 6:00 am GMT

What to Watch: AUD/CAD

On the one-hour chart above of AUD/CAD, we can see the bulls have been in steady control of the pair over the last week, bringing the market back to early September resistance just under the 0.9650 handle. Time for a reversal or will the pair break higher?

Well, with broad risk sentiment leaning positive, especially for the Aussie after a positive round of economic updates from China (China’s retail sales rise for the first time in 2020), this move could have further legs, especially if oil continues to be in the dumps after OPEC trims their 2021 demand outlook.

So the fundie drivers are there as the long as the upcoming API crude oil inventory data and Australian new home sales data play ball.

If we do see increased oil inventory combined with better-than-expected Aussie data, look for traders to continue to trend higher, and an optimal setup to consider would be a retest of the rising ‘lows’ pattern / oversold Stochastic signal before planning out a long position.

For the bears, the opposite scenario of declining oil inventory data and weaker-than-expected Aussie new home sale data may be enough to bring the short-term bears out, especially those looking to play the previous resistance area around 0.9650 and those looking to position on the idea that the RBA may ease further to support the economy.

Given the daily Average True Range of around 60 pips for the pair, that scenario could take the pair below the rising ‘lows’ pattern, which may draw in technical sellers for a potential move lower to the next strong area of interest around 0.9570.