GBP/AUD is trading in an uptrend!
How will today’s retail sales and tomorrow’s Australian CPI release affect the pair’s short-term direction?
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/JPY’s trend retracement opportunity ahead of Australia’s retail sales release. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. Commodity Futures Trading Commission (CFTC) sues Binance and its CEO Changpeng Zhao for violating local derivatives rules including encouraging evasion of compliance controls and not doing enough to stop money laundering.
Crude oil jumped by 5% during the U.S. session after the Iraqi federal government and Kurdish officials failed to agree on the resumption of around 400,000 barrels a day of oil exports from a Turkish port.
CBI: U.K. retailers reported their first positive sales expectations in seven months in April.
Gov. Bailey hints that the BOE isn’t too worried about the banking sector, saying “With the Financial Policy Committee on the case of securing financial stability, the Monetary Policy Committee can focus on its own important job of returning inflation to target.”
BRC: higher food prices accelerated shop price inflation from 8.4% to 8.9% m/m in March, its fastest rate in at least 18 years.
Gov. Kuroda: BOJ will start testing the use of a digital yen in April following two years of experiments.
Economy Minister Shigeyuki Goto shared that Japan will use budget reserves to pay 2.2 trillion yen worth of stimulus package this year to soften the impact of high inflation.
BOJ’s core CPI – a measure of underlying inflation – eases from 3.1% to 2.7% y/y in March
Russia confirmed it fired a supersonic anti-ship missile at mock target in Sea of Japan
Price Action News
The risk-taking from the U.S. session gained momentum during the Asian session and safe-havens like gold and the U.S. dollar lost value against their “riskier” counterparts.
The U.S. dollar, in particular, found an intraday bottom in the middle of the Asian session and gained at least half of its losses by early European trading.
There are no evident catalysts for the sentiment change but Australia’s weak retail sales, Binance getting sued by the CFTC, Russia firing a test missile in the Sea of Japan, and a bit of profit-taking from yesterday’s USD selling might have contributed to the safe-haven dollar’s gains.
Upcoming Potential Catalysts on the Economic Calendar:
BOE Gov. Bailey to give a speech in London at 8:45 am GMT
U.S. goods trade balance data at 12:30 pm GMT
ECB Pres. Lagarde has a speech in Frankfurt at 1:00 pm GMT
US CB consumer confidence at 2:00 pm GMT
Richmond manufacturing index at 2:00 pm GMT
Australia’s inflation report at 12:30 am GMT (Mar. 29)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/AUD: 15-min
GBP/AUD has been in an observable uptrend since late last week but it found enough resistance at the 1.8500 psychological handle to experience a pullback.
The pair is now trading just above 1.8400, which lines up with a previous high and the S1 of today’s Standard Pivot Points.
Can GBP/AUD revisit its weekly highs?
The pound is getting extra support from Bank of England (BOE) Governor Bailey assuring the markets that the U.K.’s banks remain resilient.
Data released by market research firm Kantar also revealed that U.K. grocery prices shot up by a whopping 17.5% from a year ago in March. This comes after shop price inflation saw its fastest acceleration in 18 years and after Bailey shared that the BOE remains committed to fighting inflation while another office worries about financial stability.
Meanwhile, Australia’s retail sales growth slowed down from February to March. If tomorrow’s annualized CPI report decelerates from 7.4% to 7.2% y/y in February as markets are expecting, then the Reserve Bank of Australia (RBA) will have more room to wait before raising its interest rates further.
The disparity between the BOE and RBA’s policy biases could push GBP/AUD back to the 1.5900 amidst a risk-taking environment.
But if we see more negative headlines from Europe today, or if traders take profits from their AUD trades before tomorrow’s CPI report and next week’s RBA meeting, then GBP/AUD could break its uptrend and retest previous support levels like 1.8350.
