The Aussie is set to get moving with the latest monetary policy statement from the Reserve Bank of Australia right around the corner. This event may continue to put the pressure on the Aussie, making the uptrend in GBP/AUD a market pattern to watch for potential short-term opportunities.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at the channel pattern on CAD/JPY, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
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Fresh Market Headlines and Economic Data:
Stock equities and other risk assets move higher on the session as traders fade Omicron risks
First data on omicron Covid variant’s severity is ‘encouraging,’ Fauci says; still too early to tell if it is a greater risk of death than other variants
FTSE Russell plans to develop crypto index with over 40 digital assets
Eurozone Construction PMI in November rose to 53.3 vs. 51.2 in October
U.K. Construction PMI rose to 55.5 in November vs. 54.6 in October
Animoca Brands and Binance Smart Chain form a $200M fund for GameFi projects
Upcoming Potential Catalysts on the Economic Calendar
Japan Household Spending & Average Cash Earnings at 11:30 pm GMT
U.K. Retail Sales Monitor at 12:01 am GMT (Dec. 7)
Australia Building Permits, House Prices at 12:30 am GMT (Dec. 7)
China Trade Balance at 3:00 am GMT (Dec. 7)
Reserve Bank of Australia Interest Rate Decision at 3:30 am GMT (Dec. 7)
Swiss Unemployment Rate at 6:45 am GMT (Dec. 7)
U.K. House Price Index at 7:00 am GMT (Dec. 7)
France Trade Balance at 7:45 am GMT (Dec. 7)
Euro Area GDP, Employment Change at 10:00 am GMT (Dec. 7)
ZEW Economic Sentiment Index at 10:00 am GMT (Dec. 7)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: GBP/AUD
We’re keeping it simple today with a textbook technical setup on the one hour chart of GBP/AUD. The pair has been in an uptrend over the past week, breaking major resistance around the 1.8800 handle before topping out between 1.8900 – 1.8950 last Friday.
Since then, the Aussie has been able to claw back from its recent beatdown, but that may just put GBP/AUD in a position that may attract buyers of the recent bullish shift that started mid-November.
That bullish was likely sparked by a bearish turn in the Aussie as the Reserve Bank of Australia restated last month that a rate hike is not likely until 2024. They are likely to reconfirm that notion in the upcoming monetary policy statement, an event that has a high probability of sparking short-term volatility for the Aussie.
With that scenario already priced in, its possible we may see the Aussie actually rally as Aussie sellers take profit on the event. If so, that could bring GBP/AUD back down to the previous swing highs/50% Fibonacci retracement area within a session or two. If the RBA continues to be somewhat dovish on future rate hikes, then we’ll be watching that area for support to form (i.e., bullish reversal candles) before considering a long position.
Now, if we get commentary that the RBA isn’t too worried about the recent pandemic concerns of the Omicron variant and/or that they may hike rates sooner due to excessively high inflation rates, then its possible we may see the Aussie spike higher.
That’s a low probability scenario for sure given that Australia has restricted internal borders once again, but in case we do see it, that surprise should be enough to reverse that bearish move in November, and we’d be looking at a sustained break below the 1.8800 handle as a potential short signal that could draw in more bears and profit takers this week.
