The new week and month just started but we’ve already got top tier events to shake this up! Here’s a look at AUD/CAD with potential central bank catalysts around the corner.
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Fresh Market Headlines & Economic data:
- China’s factory activity unexpectedly grows in March, a private survey shows
- Euro zone bond yields rise, China data takes edge off recession fears
- Retail sales fell in February on lower spending on building materials, electronics, and groceries
- UK Manufacturing PMI at 13-month high as pace of stockpiling hits fresh survey-record
- Parliament Seizes Control Amid Brexit Rift in May’s Tories
- Eurozone Manufacturing PMI; Greatest contraction of manufacturing sector for nearly six years in March
- Euro area annual inflation down to 1.4%
- Euro area unemployment at 7.8%
- Japan big manufacturers’ morale worsens in Q1 – BOJ tankan
- Australian PMI fell 3.0 points to 51.0 points in March 2019 (seasonally adjusted)
- Swiss National Bank has scope to go further into negative rates
Upcoming Potential Catalysts on the Forex Calendar:
- Fed Quarles speaks in New York at 5:05 pm GMT
- Bank of Canada Poloz speaks in Iqaluit at 8:10 pm GMT
- New Zealand NZIER business opinion survey at 11:00 pm GMT
- Reserve Bank of Australia rate statement at 4:30 am GMT (April 2)
- Australian government annual budget at 9:30 am GMT (April 2)
- U.K. construction PMI at 9:30 am GMT (April 2)
What to Watch: AUD/CAD
We’ve got a top tier potential catalyst coming soon with the Reserve Bank of Australia coming out with their latest decision on interest rates. The expectation is for the RBA to hold the cash rate at 1.50%, and likely cite the global trade concerns and low inflation environment as the reason for not making moves.
Australia’s housing sector has been weak so any positive rhetoric there could spark Aussie support, and the RBA has been optimistic on the jobs environment, so any negative shift there could be bearish mover for Aussie pairs. Cutting the interest rate is also not out of the question but unexpected, so that move would definitely get the bears rolling big time in the very short term.
Looking at AUD/CAD above, 0.9525 – 0.9575 is the current resistance area with a pattern of lower ‘highs’ currently forming. Stochastic is indicating short-term overbought conditions, so from a technical standpoint, odds are for a fresh move lower. If you’re a bear on the upcoming event, the short area ranges from around current levels up to 0.9575 as a possible entry range. The potential R:R is pretty good too for a short-term play if targeting the next major support area around 0.9400, an area that is reachable if the RBA surprises with a rate cut or more dovish outlook.
For the bulls, a break higher of the falling ‘highs’ with momentum and bullish RBA catalyst should be your cue to get interested in a long position. Which ever direction you’re looking to trade, it’s probably best to keep your risk small until after the event when the picture becomes clear.
Also keep in mind that Bank of Canada Governor Poloz is speaking later in the U.S. trading session. It’s a low probability event for Loonie movement, but if he surprises the markets with a shift to talks of a rate cut, the Loonie could get pummeled quickly and make a very short-term bull case for AUD/CAD ahead of the RBA. Stay frosty!