The comdolls weakened against their major counterparts today and AUD/USD is no exception.
Will the pair extend a weeks-long trend today? Or will we see an upside breakout?
Before moving on, ICYMI, yesterday’s watchlist looked at GBP/JPY’s range resistance ahead of the U.K.’s labor market release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. Federal budget deficit tightened from $171.0B to $66.6B in October thanks to an irregular surge in tax receipts
New Zealand’s food prices – which make up 19% of CPI – dipped by 0.9% m/m in October (vs. -0.4% m/m in September); annual prices edged up 6.3% higher y/y
Westpac: Australia’s consumer sentiment dropped from 82 to 79.9 in November as RBA’s rate hike put new pressure on family finances and cost of living concerns
NAB’s business survey showed Australia’s Business Conditions rising by 1 point to +13 while Business Confidence fell by 3 points to -2 in October; “both input and output cost pressures point to ongoing inflation pressures”
U.K.’s 3-month average earnings slowed down from 8.2% to 7.9%; jobless claimants rose from 9.0K to 17.8K, and the unemployment rate remained at 4.2% in October. Overall, the numbers weren’t too far from market estimates.
Switzerland’s producer prices: 0.2% m/m in October (vs 0.1% m/m expected, -0.1% m/m previous)
At a central bank conference in Zurich, SNB Chairman Jordan warned that “there is no clearly mapped-out path for monetary policy” and that they “will not hesitate to tighten monetary policy further if necessary”
Price Action News
The major currencies traded in tight(ish) ranges for most of the Asian and early London session trading so it was easy to pinpoint GBP’s strong moves.
The British pound received support from the U.K.’s October labor data coming in only slightly weaker than the markets had expected.
GBP popped higher at the start of the European session and reversed most of its moves. It’s looking a lot like GBP could regain its intraday highs though. Stay tuned!
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone’s quarterly employment change at 10:00 am GMT
Eurozone’s flash GDP at 10:00 am GMT
German ZEW economic sentiment at 10:00 am GMT
Eurozone ZEW economic sentiment at 10:00 am GMT
U.S. CPI reports at 1:30 pm GMT
Japan’s preliminary GDP at 11:50 pm GMT
Australia’s quarterly wage price index at 12:30 am GMT (Nov 15)
China’s data dump at 2:00 am GMT (Nov 15)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
Global stocks and bonds edged higher today in anticipation of slower U.S. inflation and “peak rate” bets for the Fed.
The major currencies missed the memo, however, as “risky” bets like AUD, CAD, and NZD traded weaker against their major counterparts.
AUD/USD, in particular, turned lower from the .6375 levels before finding support at the .6360 support and resistance zone.
Will the pair stay inside its descending channel pattern? Or will we see a breakout today?
The comdoll is likely to see some action with the U.S. CPI report scheduled during the U.S. session and China’s data dump out in the next Asian session trading.
In case you missed the latest Week Ahead report and U.S. CPI Event Guide, traders are expecting to see slower inflation from the U.S. which may convince the Fed to tone down its hawkish biases. Meanwhile, China’s closely watched growth markers could maintain their September figures.
If we do see slower U.S. consumer price inflation, then more traders could price in their “peak rate” speculations. The safe haven USD may be dumped in favor of riskier assets like AUD.
This could lead to AUD/USD breaking above its trend line resistance and testing potential inflection points like .6400.
But if the next trading sessions’ economic releases encourage “higher for longer” or global growth slowdown speculations, then AUD/USD may maintain its downtrend.
The pair could turn lower from its current levels and dip back down to the S1 (.6350) Pivot Point line if not the .6340 previous low.