Possible Channel Trend over next 2 weeks

1 juil. 2020

I'm in the view that there is still too much uncertainty in the market for there to be a clear breakout in any direction from the obvious triangle pattern others have pointed out. This pair being risk sentiment linked and closely correlated to China would warrant a gradual bullish channel trend in the immediate 2 week term due to the gradual recovery of both AU and China's economies.

Event risk is not in upcoming macro releases but rather COVID resurgences, stimulus intervention and policy globally.

Also not expecting any major investment inflows after end of financial year in AU and yield curve control (YCC) via RBA open market operations effectively pinning down bond yields.

While political tension between Australia and China is a real risk here, the current rhetoric is not close enough to a boiling point to warrant a noticeable shift in sentiment towards a broad off-risk environment for any AUD pairs.

Conservative trade strategy is to wait for channel support to be confirmed before longs are entered but a market entry following a minor retracement to around 74.4 can be attempted if intraday position is being managed actively.

1 juil. 2020

Note

Partial lockdown imposed in 2nd largest city of Melbourne due to raising COVID cases. Government has not ruled out state wide lockdown and is likely cause of recent down move.

Original long entry looks intact though increased risk of further down side move beyond 72.7 if lockdown is reintroduced

7 juil. 2020

Note

RBA coming and expectation is still no intention of going to negative interest rates but key will be in the details with rates expected to remain at current levels. Muted risk from tensions with China and overnight equity market moves may spook cautious players and drive JPY up to cover positions before going into 14.30 announcement