Surprisingly strong Australian labor data and lowkey Chinese government stimulus measures boosted AUD earlier today.
Will the AUD-buying lead to AUD/CAD breaking its downtrend pattern?
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/NZD’s potential trend continuation trade ahead of Australia’s labor market data 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:
Global wheat prices soared after Russia ended grain deal with Ukraine, warned it would treat ships heading for Ukrainian ports as potential military targets
U.S. building permits for June: 1.44M (1.46M forecast; previous revised higher to 1.5M); housing starts fell by -8.0% m/m but better than expected and still at pre-pandemic levels.
EIA weekly US oil inventories for the week ending on July 14, 2023: -71M barrels to 457.4M barrels, still above the five-year average for this time of year
U.S. stock futures lower after Tesla and Netflix earnings disappointed
Japan posts first annual trade surplus in 23 months as exports grew by 1.5% y/y while imports dipped by 12.9% in June
PBoC set its USD/CNY daily fixing at just under 7.15, about 680 pips stronger than estimates and the largest since November
PBoC raised a parameter on cross-border corporate financing under its macro-prudential assessments (MPA) to 1.5 from 1.25, allowing companies to borrow more overseas in proportion to their assets
Deputy Director Li Chunlin of China’s National Development and Reform Commission shared that two new policies for supporting non-state-owned businesses will be launched soon
Australia added net 32.6K jobs in June vs. 15K expected, 76.6K previous. The unemployment rate dipped from 3.6% to 3.5% as the participation rate edged 0.1% lower to 66.8%
Australia’s quarterly NAB survey showed business confidence rising 1pt to -3 while business conditions dropped 8 pts to +9 as businesses “moderated considerably” in Q2
Switzerland’s trade surplus tightened from 4.4B CHF to 3.3B CHF in June as exports fell by 1.7% m/m while imports grew by 3.7%
Germany’s producer prices edged up 0.1% y/y in June – the lowest since November 2020 – vs. 0.0% expected, 1.0% y/y in May
Price Action News
The Australian dollar was the biggest market mover earlier today thanks to a one-two punch of strong Australian jobs data and the Chinese government making moves to stimulate its economy.
Stronger-than-expected Australian labor market numbers give the Reserve Bank of Australia (RBA) room to raise its interest rates higher if needed.
Meanwhile, the People’s Bank of China (PBoC) (a) setting its USD/CNY reference rate way lower than expected and (b) easing its rules to allow more capital inflows would stimulate economic activity in Australia’s largest trading partner.
AUD, which was trading near its U.S. session lows, was already gaining ground before Australia’s jobs data pushed it to new intraday highs across the board.
U.S. initial jobless claims at 12:30 pm GMT
Philly Fed manufacturing index at 12:30 pm GMT
Eurozone consumer confidence at 2:00 pm GMT
U.S. existing home sales at 2:00 pm GMT
U.S. CB leading index at 2:00 pm GMT
U.K. GfK consumer confidence at 11:01 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
Australia’s tight jobs data and China’s stimulus measures got traders buying AUD!
AUD/CAD, which was chillin’ near its intraweek lows, jumped all the way to the .8980 zone before taking a breather.
Is the pair set for an upside breakout?
Notice that AUD/CAD is finding some support at the R1 (.8960) of today’s Pivot Points. At the same time, it’s forming a possible bullish flag pattern on the 15-minute time frame.
A bounce above today’s highs would mean that AUD/CAD has broken above its descending channel pattern.
The pair could head for the .9000 psychological handle or the .9020 previous highs before enough sellers step in.
Watch this one closely, yo!