Aussie pairs are on the move today thanks to China’s PMI and the RBA decision.
Is AUD/NZD gearing up for a breakdown, too?
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/AUD’s trend line pullback ahead of the RBA decision. 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.K. BRC retail sales advanced from 1.8% to 4.3% y/y in August, outpacing consensus of 2.2% increase to show strong surge in spending
Japanese household spending slumped further by 5.0% y/y in August instead of improving from earlier 4.2% decline to a 2.4% drop
New Zealand commodity prices fell by 2.9% m/m in August due to lower dairy and lamb prices, following earlier 2.6% slump
Chinese Caixin services PMI fell from 54.1 in July to 51.8 in August vs. estimated 53.6 figure, reflecting slowest pace of growth in eight months
RBA kept interest rates on hold at 4.10%, cites that “further tightening may be needed” but that inflation may have already passed its peak and that uncertainties are weighing on outlook
Chinese property developer Country Garden Holdings manages to avoid default by paying $22.5 million in coupons but still seeking to extend payments on seven more onshore bonds by three years
Price Action News
Aussie and Kiwi pairs were once again the big movers for the day, thanks to a bout of risk-off flows and a relatively cautious RBA announcement.
Updates from China took center stage early in the Asian session, as news of property developer Country Garden Holdings narrowly avoiding a default hit the airwaves. This was followed by the release of a downbeat Caixin services PMI, which triggered a flight to safety.
Soon after, the RBA announced its decision to keep rates on hold as expected and maintain their forward guidance. Still, the reaction was generally bearish since market players are likely taking in the latest downturn in China into account.
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.S. factory orders at 2:00 pm GMT
New Zealand GDT auction coming up
Australian quarterly GDP at 1:30 am GMT (Sept. 6)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
AUD/NZD: 15-min
Unlike most of the AUD pairs that have already staged sharp breakouts today, AUD/NZD is still stuck inside its short-term range and is currently testing support.
Candlesticks closing below the floor at S1 (1.0840) could be enough to confirm that a drop of the same height as the rectangle might follow. This could take the pair down to the next downside barrier at S2 (1.0820) or even to S3 (1.0800).
If support holds, on the other hand, AUD/NZD might set its sights back on the range resistance near R1 (1.0890) and the 1.0900 major psychological mark.
The upcoming Australian GDP release might determine whether this pair is in for a bounce or a break, as a downbeat result could highlight the below-trend domestic growth mentioned by RBA policymakers earlier today.
Just make sure you take note of the average AUD/NZD volatility when trading this one!
