The short-term down trend in AUD/CAD may pick up soon with potential catalysts coming from Australia and the oil inventory data.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/JPY as it broke down out of consolidation, 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:
Dow falls for a second day as traders weigh stimulus and surging Covid cases
Oil dips as COVID cases and lockdowns outweigh vaccination news
U.S. third-quarter productivity trimmed to 4.6% rate
No substantial progress in Brexit trade talks, Germany’s Roth says
EU shifting from compromise to no-deal preparations – Coveney
U.K. Scraps Lawbreaking Clauses in Deal Boost
As deadline nears, Johnson says Britain could abandon Brexit trade talks
The Swiss unemployment rate rose from 3.2% in October 2020 to 3.3% in November
FDA says Pfizer Covid vaccine provides some protection after first dose, meets success criteria
Upcoming Potential Catalysts on the Economic Calendar
API Crude oil stock change at 9:30 pm GMT
New Zealand Manufacturing Sales at 9:45 pm GMT
Australia Consumer confidence at 11:30 pm GMT
Japan Machinery Orders, M2 Money supply at 11:50 pm GMT
Australia Building Permits at 12:30 am GMT (Dec. 9)
China Inflation Rate at 1:30 am GMT (Dec. 9)
What to Watch: AUD/CAD
On the one hour chart above of AUD/CAD, we can see the trend has been a friend to the bears as the pair slow grinds lower over the first week of December. And with market sentiment shifting negative as traders focus on the pandemic more than the stimulus / vaccine news, this trend could continue for now.
We do have potential catalysts for increased volatility ahead for AUD/CAD with the oil inventory numbers and Australian economic data coming in the Asia session. And for those looking to play AUD/CAD beyond the Asia session the latest monetary policy statement from the Bank of Canada is coming on Wednesday, but with expectations of no policy changes, it could be a non-factor for the Loonie if that’s the case.
So, for those looking for continued bearish moves in AUD/CAD, watch out for a retest and bearish reversal patterns around the previously broken support area (around the 0.9520 level). With a daily ATR of around 60 pips, that level is reachable within a session or two.
For those who are more aggressive and/or fear missing out on the bearish trend, scaling into a short position up to that broken support area is an entry strategy to consider.
For the bulls on AUD/CAD, it’s likely we need to see the full combo of positive Australian economic updates, oil inventory increases, and a flip in positive risk sentiment before traders get fully bullish on AUD/CAD. And a dovish BOC statement would help as well for you swing traders out there.
If this scenario plays out, look for a break above the falling ‘highs’ pattern marked on the chart before considering a long position. Or if the pair forms bullish reversal candles in the 0.9400 – 0.9450 potential support area, you may want to start planning your buys there as well.