Not feeling like trading the U.S. dollar today?
We’ve got our eyes on AUD/CAD possibly reversing from its short-term trend! What do you think?
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/USD’s resistance-turned-support level ahead of the FOMC 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:
Canada CPI for October: 0.1% m/m vs. -0.1% m/m previous; 3.1% y/y vs. 3.8% y/y previous; Core CPI was 0.3% m/m vs. -0.1% m/m, 2.7% y/y vs. 2.8% y/y
Canada New Housing Pricing Index for October: -0.8% y/y vs. -1.0% y/y previous; 0.0% m/m vs. -0.2% m/m forecast/previous
U.S. Existing Homes Sales for October: -4.1% m/m to 3.79M (-1.3% m/m forecast; -2.2% m/m previous)
A Reuters poll reflected that 80% of economist participants believe that the BOJ will end its negative interest rates policy next year
BOJ offered to buy 535B JPY worth of bonds with 5-10 years maturity, lower than its 575B JPY offer a week ago and helped prop up the 10-year JGB yields
API: U.S. crude oil inventories rose by 9.05 million barrels for the week ending Nov 17 (vs. forecasts of 1.467 million barrel build)
FOMC meeting minutes repeated the Fed’s hawkish bias but also its plans to “proceed carefully” and look to incoming information for cues to its next steps
In a speech, ECB President Lagarde cautioned against “premature conclusions” and shared that the central bank will “remain focused on bringing inflation back to our target”
Australia’s Melbourne Institute Leading Index dipped from -0.38% in September to -0.40% in October; “[RBA] policy meetings next year will be very much ‘live’”
In a speech, RBA Gov. Bullock shared that the presence of “homegrown inflation” risks means that “getting inflation back to target will take time”
U.K. to raise minimum wage from 10.42 GBP to 11.44 GBP per hour starting April 2024
Price Action News
Overlay of JPY vs. Major Currencies Chart by TradingView
We didn’t see top-tier Japanese economic data releases today but that didn’t stop JPY traders from moving the safe haven around!
The Japanese yen weakened across the board after the FOMC meeting minutes reminded traders of the Fed’s hawkish bias and boosted the U.S. dollar’s rep as a safe haven.
Updates such as the Bank of Japan (BOJ) buying fewer bonds and a Reuters poll suggesting that the BOJ would soon exit its negative interest rates policies should have upped the demand for JPY.
Instead, traders were happy to sell the yen. JPY is currently weakest against USD, GBP, and AUD.
Upcoming Potential Catalysts on the Economic Calendar:
U.K. CBI industrial order expectations at 11:00 am GMT
U.S. initial jobless claims at 1:30 pm GMT
U.S. core durable goods orders at 1:30 pm GMT
U.S. revised UoM consumer sentiment at 3:00 pm GMT
U.S. crude oil inventories at 3:30 pm GMT
BOC Gov. Macklem to give a speech at 4:30 pm GMT
Australia’s flash manufacturing and services PMIs at 10:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
AUD/CAD 15-min Forex Chart by TradingView
If you’re looking for non-USD pairs to trade, then you could turn your eyes on AUD/CAD which may soon see a reversal from its short-term trend.
Recall that USD weakness, lower crude oil prices, higher Chinese yuan, and overall risk-taking have helped Australian dollar demand in the last few days.
AUD/CAD bounced from its .8860 lows and hit .9020 highs before pulling back down to its current levels.
AUD/CAD also eventually broke below a trend line support for the first time in days. But the pair found support from the S1 (.8950) Pivot Point line before retesting its broken support area.
Are we looking at a reversal in the making?
Australia’s weaker-than-expected leading indicators report and a slight recovery in crude oil prices may attract bearish pressure after AUD/CAD’s downside technical breakout. A hawkish FOMC meeting minutes also killed some of the risk-taking mood yesterday and may contribute to AUD hitting new weekly lows against CAD.
Look out for bearish candlesticks below the 15-minute chart’s 100 SMA and broken trend line area. If the selling attracts some momentum, then we may see AUD/CAD dip to its .8950 previous lows or the S2 (.8920) Pivot Point support zone.
A continuation of AUD/CAD’s uptrend is still on the card, of course, but AUD/CAD bulls may need new headlines or fresh momentum before we see AUD/CAD trade back above its trend line support.
What do you think? Which way will AUD/CAD go?
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