Risk-off flows have been in play lately, so will we see a bullish breakout on this range?
Here are the levels and catalysts I’m watching.
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:
Australian flash manufacturing PMI down from 57.7 to 55.3
Australian flash services PMI slipped from 55.1 to 45.0
Japanese flash manufacturing PMI ticked up from 54.3 to 54.6 vs. 55.0 consensus
Asian shares on the backfoot as investors brace for hawkish Fed
Russia-Ukraine conflict bring risk-off flows to financial markets
PBOC cut interest rates by 10 bps on 14-day reverse repo
French flash services PMI tumbled from 57.0 to 53.1 vs. 55.3 forecast
French flash manufacturing PMI dipped from 55.6 to 55.5
German flash manufacturing PMI climbed from 57.4 to 60.5
German flash services PMI up from 48.7 to 52.2 vs. 47.9 consensus
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.K. flash manufacturing and services PMIs at 9:30 am GMT
U.S. flash manufacturing and services PMIs at 2:45 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/AUD
Forex traders didn’t seem to be in the mood for riskier currencies early this week, as geopolitical risks and expectations of a hawkish Fed kept rallies in check.
It didn’t help the Aussie that the flash PMIs for January printed declines for both manufacturing and services sectors. Plus, the Chinese central bank cut interest rates once more, suggesting that they are wary of weaker economic performance.
These risk-off flows are taking GBP/AUD close to the top of its range, ready to test the resistance around 1.8965.
If risk aversion extends its stay in the financial markets in the next trading sessions, we just might see a bullish breakout and a rally that’s the same height as the rectangle pattern.
On the other hand, a return in risk-taking might be enough to take the pair back down to the bottom of the range around the 1.8800 handle soon. Stochastic is reflecting overbought conditions, which means that buyers are exhausted and could let sellers take over.
If you’re planning on trading this one, better keep an eye out for the U.K. flash PMI readings due today, too!
