InstaForex

November 5, 2021

Daily Asia-London Sessions Watchlist: AUD/USD

 There’s no love for the U.S. dollar after today’s Fed statement, and with Australian data ahead, we’re looking at AUD/USD to see if short-term setups still remain.


Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at USD/JPY ahead of the Fed meeting and U.S. employment update, so be sure to check that out to see if there is still a potential play!


Intermarket Update:

Equity Markets Bond Yields Commodities & Crypto

DAX: 15959.98 +0.03%

FTSE: 7248.89 -0.36%

S&P 500: 4660.57 +0.65%

NASDAQ: 15811.58 +1.04% US 10-YR: 1.602% +0.055

Bund 10-YR: -0.164% +0.003

UK 10-YR: 1.074% +0.001

JPN 10-YR: 0.077% -0.017 Oil: 80.10 -4.54%

Gold: 1,773.50 -0.89%

Bitcoin: $62,797.50 -1.33%

Ether: $4,617.25 +2.24%

Solana: $239.91 +11.50%

Fresh Market Headlines and Economic Data:

FOMC statement: Fed will reduce bond purchasing program (by $10B Treasury; $5B in mortgage-backed securities); inflation to last “well into next year”


Alt tokens on the move: Ethereum hits new all time high at $4,670; Solana likely to break $240 soon


EIA shows bigger than expected jump in crude inventories but gasoline inventory falls to its lowest level since Nov. 2017


Markit US Services PMI: 58.7 in October vs. 54.9 in September



ECB President Largarde says that it is ‘very unlikely’ that ECB will hike rates next year; long-term outlook for inflation remains subdued


UK Services PMI: 59.1 in October vs. 55.4 in September


Australia Services PMI for October: 51.8 vs. 45.5 in September


J.P. Morgan Global Manufacturing PMI: 54.3 in October vs. 54.1 September; “Growth of global manufacturing output slows amid record supplier delays, rising costs and stalling export trade”


Upcoming Potential Catalysts on the Economic Calendar


New Zealand Commodity Prices at 12:00 am GMT (Nov. 4)

Australia Trade Balance, Retail Sales at 12:30 am GMT (Nov. 4)

Japan Services PMI at 12:30 am GMT (Nov. 4)

Germany Factory Orders at 7:00 am GMT (Nov. 4)

Various European Services PMI starting at 8:15 am GMT (Nov. 4)

Euro area Services PMI at 9:00 am GMT (Nov. 4)

U.K. Construction PMI at 9:30 am GMT (Nov. 4)

Euro area PPI at 10:00 am GMT (Nov. 4)


If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.


What to Watch: AUD/USD

It looks like forex traders are not loving the Greenback after the Fed decides to taper their bond purchasing program by $15B a month as expected. The reaction is probably due to the Fed’s continued stance that rising prices is still “transitory”, likely viewed as an open door for the Fed to push rate hike expectations further down the road, and likely why USD is getting no love at the moment.


This may be the catalyst for short-term bearish sentiment on the Greenback, which makes AUD/USD one to watch as it just possibly formed a double bottom pattern on the one hour chart above. We can see two attempts by the market to break the 0.7420 minor support area ahead of the event, and with this latest development from the Fed, that support may draw in buyers for now.



We do have mid-tier Australian economic catalysts ahead in the form of the latest trade and retail sales data to potentially keep volatility up on AUD/USD, and if they both give us better-than-expected/previous numbers, then this bounce higher may hold throughout the next session.


We’ll be keeping an eye on those numbers, but if they disappoint greatly (possibly due to a slow down in China, Australia’s largest trading partner), then the Aussie may see a fresh round of sellers to continue an already weak performance this week. In this scenario, watch out for bearish reversal patterns if AUD/USD retests the minor broken support area around 0.7480, or if it sustains a break below the 0.7420 handle as this may draw in more technical sellers.