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I’m watching this Aussie pair closing in on a key support level ahead of Australia’s quarterly GDP release.
Can we see a bounce soon?
Before moving on, ICYMI, yesterday’s watchlist checked out GBP/AUD’s potential trend reversal ahead of China’s Caixin services PMI. 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:
Tokyo core CPI reaccelerated from upgraded 1.8% y/y figure (initial 1.6% reading) to 2.5% in February
New Zealand ANZ commodity prices rose from 2.1% m/m to 3.5% in February, buoyed by higher dairy and meat prices
U.K. BRC retail sales monitor dipped from 1.4% y/y to 1.0% in February instead of rising to estimated 1.6% reading
Chinese Caixin services PMI fell from 52.7 to 52.5 vs. estimated improvement to 52.9 to reflect slower pace of industry growth
Chinese gov’t declared “around 5% GDP target” for 2024 during China’s National People’s Congress’s Work Report, along with aims to add 12 million urban jobs
Australian current account surplus widened from 1.3 billion AUD to 11.8 billion AUD vs. estimated 4.9 billion AUD surplus due to a surge in iron ore and coal exports
Price Action News
Overlay of AUD Pairs vs. Major Currencies Chart by TradingView
Aussie pairs continued to crawl lower from its New York session slump and onto the early Asian market hours.
Even though there were some optimistic announcements during China’s National People’s Congress’s Work Report, which included a lofty 5% GDP target for the year and additional special government debt, risk appetite seemed nowhere to be found.
It appears that investors weren’t very impressed by these declarations, especially since the numbers from China’s Caixin services PMI don’t lie. The reading fell from 52.7 to 52.5 instead of chalking up the estimated improvement to 52.9 in February.
Meanwhile, Australia’s current account surplus turned out stronger than expected and suggested a potential upside to the upcoming GDP release, but Aussie bulls still weren’t inclined to charge.
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone final services PMI at 9:00 am GMT
U.S. final S&P Global services PMI at 2:45 pm GMT
U.S. ISM services PMI at 3:00 pm GMT
U.S. factory orders at 3:00 pm GMT
U.S. IBD/TIPP Economic Optimism index coming up
FOMC member Barr’s speeches at 5:00 pm and 8:00 pm GMT
Australian quarterly GDP at 12:30 am GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
AUD/NZD 15-min Forex Chart by TradingView
The Aussie has been edging lower against most of its counterparts, as traders aren’t exactly expecting much from the Q4 2023 GDP report.
While there have been some signs of a pickup in business activity, weaker retail sales, inventories, and export growth for the December quarter might translate to a downbeat GDP reading.
Then again, there might be room for an upside surprise as the freshly-printed current account surplus beat expectations by a mile.
If so, AUD/NZD might still be able to bounce off its larger channel support, with a move above the pivot point level (1.0686) paving the way for a climb to the next upside targets at R1 (1.0694) then the channel top.
On the other hand, a downside GDP surprise might lead traders to price in the possibility of the RBA shifting to a less hawkish stance later on, leading to a drop below the channel bottom and S1 (1.0670).
If this happens, the pair might set its sights on the bearish targets at S2 (1.0660) and S3 (1.0650) next.
Don’t forget that the RBNZ maintained a relatively upbeat tone in their latest policy decision, making them one of the last few major central banks to do so.
In any case, make sure you account for the average AUD/NZD volatility when trading this one!
