Can AUD/CAD sustain its post-RBA rate hike momentum even when the BOC makes its policy announcement?
Check out this consolidation pattern I’m watching!
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/JPY’s pullback after the surprise RBA hike. 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:
SEC sued crypto exchange Coinbase for operating as an unregistered broker, a day after filing a lawsuit against Binance
World Bank raised global growth forecast from 1.7% to 2.1% for the year but downgraded 2024 forecast from 2.7% to 2.4%
Australia’s Q1 GDP showed that economy expanded only 0.2% quarter-on-quarter vs. projected 0.3% growth figure, earlier reading upgraded from 0.5% to 0.6%
RBA Governor Lowe said that further tightening may be needed since it’s too early to declare the battle against inflation is over
Chinese trade surplus shrank from $90.2 billion to $65.8 billion in May, as exports slumped 7.5% while imports fell 4.5% year-over-year
German industrial production rose 0.3% month-over-month versus projected 0.7% uptick in April, earlier reading revised from 3.4% drop to 2.1% decline
Price Action News
The Aussie carried on with its bullish run against its forex counterparts for the most part of the New York session, before returning some gains when the Land Down Under printed its Q1 GDP.
Adding further downside for the Aussie was China’s downbeat trade balance, which revealed a sharper than expected slump in export activity.
Still, the commodity currency managed to regain its bearings when RBA head Lowe reiterated the need to keep tightening in order to ward off stubborn inflationary pressures.
Upcoming Potential Catalysts on the Forex Economic Calendar:
BOC monetary policy statement at 2:00 pm GMT
U.S. EIA crude oil inventories at 2:30 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
Breakout alert!
This Aussie pair settled in consolidation after the previous day’s sharp rally following the surprise RBA interest rate hike.
Now it will be the BOC’s turn to make their June 2023 monetary policy decision, and many are expecting some hint of hawkishness from the Canadian central bank.
If they hike rates or signal willingness to resume tightening soon, the Loonie could regain the upper hand and spur a breakdown for AUD/CAD.
This might be enough to take the pair down to S1 (.8900) which lines up with the previous day low or even all the way down to S2 (.8850) that lines up with another psychological level.
A cautious BOC announcement, on the other hand, could trigger a bullish break and take AUD/CAD up to R2 (.9000).
