AUD/NZD rises up to the top of the watchlist as a busy calendar ahead is likely to bring on a slew of potential setups for traders to take on.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD as it consolidates, 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
Fed Williams speech at 7:00 pm GMT
Fed Mester speech at 7:00 pm GMT
Australia Construction index at 9:30 pm GMT
API Crude Oil inventory at 9:30 pm GMT
New Zealand Employment at 9:45 pm GMT
Australia Services PMI at 10:00 pm GMT
Australia Building Permits at 12:30 am GMT (Feb. 3)
Japan Services PMI at 12:30 am GMT (Feb. 3)
RBA Governor Lowe speech at 1:30 am GMT (Feb. 3)
China Services PMI at 1:45 am GMT (Feb. 3)
What to Watch: AUD/NZD
On the one hour chart of AUD/NZD above, we can see the bears have been in clear control of the pair, going back to mid-January 2020. And bears got an extra boost on the session after the Reserve Bank of Australia surprised traders by extending their quantitative easing program beyond mid-April.
So, it’s likely the Aussie could underperform in the short-term, but with support forming around the 1.0600 handle and stochastic showing potentially oversold conditions, a bounce may be in the cards for AUD/NZD in the next session.
Well, that may all depend on what we get from the forex calendar, which is very busy in the upcoming Asia session for both the Aussie and the Kiwi. Most notable among the group is the latest employment update from New Zealand, with expectations that we’re going to see disappointing reads on both net jobs change and the unemployment rate.
So, if that scenario plays out and Kiwi bears hop in, odds are pretty good we will see a bounce in AUD/NZD. Short-term players will likely have a chance to scalp a rally, but they should be cautious if the market gets back up to the Fib levels / broken support area marked on the chart above. Longer-term players may hop in that area to play the overall trend lower, depending on how bad or good the NZ jobs data may be.
Also be on the look out for a downside break of the 1.0600 handle on surprisingly positive NZ numbers. The move would likely be fast in this scenario as it would support the longer-term trend lower, likely bring traders from all time frames to go with the flow.