An RBA meeting minutes released enabled AUD to extend its gains against USD.
Can AUD/USD extend its short-term uptrend today?
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/AUD’s potential support zone ahead of the RBA’s meeting minutes 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:
Japan’s tertiary industry activity dipped by -0.1% in August (vs. 0.4% expected, 1.1% previous)
New Zealand’s annual inflation slowed down from 6.0% to a two-year low of 5.6% in Q2 (vs. 5.9% expected)
RBA’s October meeting minutes showed members considered a 25bps rate hike but the case to leave the cash rate unchanged “was the stronger one”
Country Garden in final hours to avoid first dollar bond default
U.K.’s wage growth slowed down from 8.5% to 8.1% in the three months to August compared to a year ago; pay growth excluding bonuses also dipped from 7.9% to 7.8% in August
German’s ZEW economic sentiment improved from -11.4 to -1.1 in October (vs. -9.1 expected)
Eurozone ZEW economic sentiment higher from -8.9 to 2.3 in October (vs. -7.7 expected)
Price Action News
The New Zealand dollar can’t seem to catch a break!
The commodity-related currency started the day on the bearish side of the charts as traders priced in New Zealand’s inflation dropping to a two-year low in Q2.
NZD traded in a tight range after the report’s release but the comdoll also caught a fresh wave of selling at the start of the European session. It’s currently trading the lowest against today’s popular currencies like AUD, EUR, and USD and has lost the fewest pips against GBP and CAD.
Upcoming Potential Catalysts on the Economic Calendar:
Canada’s CPI report at 12:30 pm GMT
U.S. retail sales data at 12:30 pm GMT
U.S. industrial production at 12:30 pm GMT
U.S. business inventories at 2:00 pm GMT
RBA Gov. Michele Bullock to give a speech at 10:35 pm GMT
China’s data dump at 2:00 am GMT (Oct 18)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
AUD caught a bullish wave earlier today when the RBA’s meeting minutes revealed that members were THIS close to raising their interest rates by another 25bps.
That’s despite the gang believing that “the labour market had reached a turning point”!
Keeping their cash rates unchanged was the “stronger” case in October but the RBA also warned that members have a “low tolerance for a slower return of inflation to target than currently expected.”
TL;DR: Disinflation better pick up. OR ELSE.
The relatively hawkish RBA minutes pushed AUD/USD higher but a bit of risk aversion during the European session also dragged the pair back to the .6350 levels.
Are we looking at a chance to jump in AUD/USD’s short-term uptrend?
AUD/USD is sitting on an ascending channel support that’s been around since late last week. This time around, the trend line support is also near the 100 SMA as well as an area of interest yesterday and earlier today.
A couple more bullish candlesticks from the area could propel AUD/USD to break its R1 (.6360) resistance zone and to new weekly highs.
But if today’s U.S. retail sales and industrial production reports encourage USD-buying, or if we see a risk-averse trading environment, then AUD/USD may break its uptrend and retest the .6330 inflection point.