The Aussie has pulled back A LOT against the euro in the past couple of days!
Will EUR/AUD go back to losing pips during the RBA’s policy decision?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Over the weekend, the U.S. Congress averted a government shutdown as it passed a bill to keep the government open
China’s official manufacturing PMI improved from 49.7 to 50.2 in September; non-manufacturing PMI higher from 51.0 to 51.7
Over the weekend, China’s Caixin manufacturing and services PMIs showed businesses still expanding but at weaker levels in September. Manufacturing PMI is down from 51.0 to 50.6, while the services PMI is down from 51.8 to 50.2
Chinese and Australian markets out on bank holidays
New Zealand’s building permits dropped by 6.7% m/m in August vs. a 5.4% decline in July
BOJ’s Opinions Summary report showed policymakers discussed the possibility of exiting from their ultra-loose policy
Sentiment among Japan’s biggest manufacturers improved from 5 to 9 in Q3; Non-manufacturers’ sentiment also edged higher from 23 to 27
Melbourne Institute’s inflation gauge recorded zero change in consumer prices in September (vs. 0.2% uptick in August)
Japan’s au Jibun Bank manufacturing PMI revised lower from 48.6 to 48.5; “Manufacturing conditions deteriorate at a sharper rate in September”
U.K.’s house price growth unchanged in September, down 5.3% y/y – Nationwide
Switzerland’s real retail trade turnover fell by 1.8% y/y in August as expected (vs. -2.5% in July)
JPow and the Federal Reserve Board of Governors joined Instagram and Threads today! 😎
Price Action News
The Swiss franc was king of pips earlier today as the safe haven gained ground across the board at the start of London session trading.
There were no big catalysts to push CHF higher but it may have helped that Switzerland’s retail sales and manufacturing PMI reports came in stronger than their previous readings AND better than the markets had expected.
It also didn’t hurt that PMI reports in the Eurozone came in strong, which supported the ECB’s hawkish stance and kept high interest rates/growth concerns alive for the European region.
CHF has gained the most against AUD and NZD and is clocking in the least gains against safe havens like USD and JPY.
Upcoming Potential Catalysts on the Economic Calendar:
U.K.’s final manufacturing PMI at 8:30 am GMT
Eurozone’s unemployment rate at 9:00 am GMT
Canada’s manufacturing PMI at 1:45 pm GMT
U.S. ISM manufacturing PMI at 2:00 pm GMT
Fed Chairman Powell to give a speech at 3:00 pm GMT
FOMC member Harker to give a speech at 3:00 pm GMT
FOMC member Barr to give a speech at 5:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
EUR/AUD: 15-min
In case you missed it, strong PMI reports from the Eurozone as well as muted risk-taking at the start of a new month helped push EUR higher against its major counterparts.
This is probably why EUR/AUD, which bounced from its 1.6325 support late last week, is now trading closer to the 1.6470 R1 (1.6480) Pivot Point level in the 15-minute time frame.
What makes the setup interesting today is that EUR/AUD has paused its gains somewhere around September’s key support zone.
Will the pause lead to a rejection and then a downswing for EUR/AUD when the RBA prints its monetary policy decision?
Unless there’s fresh catalyst to push EUR higher in the next trading sessions, EUR/AUD may get rejected from its current levels. After all, the Reserve Bank of Australia (RBA) may keep its interest rates unchanged as expected, but market players also see the central bank keeping its biases hawkish at least until the end of the year.
A rejection at EUR/AUD’s current levels could lead to the pair revisiting its 1.6400 area of interest if not the 1.6330 previous lows.
How about you? Think EUR/AUD will see a fresh leg higher? Or will the 1.6470 previous support turn out to be a resistance this time?
