Volatility picked up big time for GBP/AUD on the session, and with the latest Aussie jobs numbers ahead, we could see traders take interest as the market retests a potential resistance area.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/NZD after it broke a textbook technical pattern, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
U.S. producer prices increase broadly in September
Fed Vice Chair Clarida says economy needs ‘perhaps another year’ to return to pre-pandemic level
New virus containment measures would require more ECB stimulus, Holzmann says
Oil under pressure as coronavirus spike stokes demand concerns
UK PM Johnson resists national lockdown but rules nothing out
On brink of disaster’: shaken Europe battles COVID surge
No EU summit on Brexit expected in November, EU official says
Japan Industrial production -13.8% y/y in August
Upcoming Potential Catalysts on the Economic Calendar
Fed Quarles speech at 7:00 pm GMT
API Crude oil inventory at 8:30 pm GMT
RBA Governor Lowe speech at 9:45 pm GMT
Fed Kaplan speech at 10:00 pm GMT
Australia Employment change, Unemployment rate at 12:30 am GMT (Oct. 15)
China CPI, PPI at 1:30 am GMT (Oct. 15)
Japan Tertiary Industry Activity at 4:30 am GMT (Oct. 15)
What to Watch: GBP/AUD
On the one-hour chart above of GBP/AUD, we can see a rocket move higher from the strong support area around the major psychological area of 1.8000.
This was likely due to the news of Brexit talks likely going beyond the October 15th deadline, which Sterling higher against all of the major currencies.
After today’s pop, the currency pair is now testing a strong area of interest that has served as both support (in August) and resistance (through the end of September into October) in recent months. Will we see resistance once again?
Well, we’ve got another potential major catalyst ahead in the form of the latest Australian employment update. This will cover the September time period, and based on Forex Gump’s analysis, odds are that the number could come in negative, sentiment that may have already been factored into the Aussie based on its relative weakness this week.
So, if that Aussie jobs number comes inline or better-than-expected, we may see GBP/AUD bears take control once again, and with a daily ATR range of around 150 – 160 pips, a move all the way back to near the bottom of the range is not out of the question within a session or two.
If the jobs numbers come below expectations, this could spark an upside break of the resistance area around 1.8200. In that scenario watch out for a break and retest pattern to form before considering a long position.
Also take into account that with Brexit negotiations still ongoing, news flow from the U.K. could easily turn the tides for the British pound; adjust your risk tolerances and strategy accordingly.
