Downbeat data points from Australia seem to have AUD traders bracing for a weak Q4 2023 GDP reading.
What’s next for GBP/AUD then?
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:
New Zealand overseas trade index slumped 7.8% q/q in Q4 2023 vs. estimated 0.1% dip and previous 0.6% reduction
Japanese capital spending rose 16.4% q/y in Q4 2023 vs. projected 2.9% growth and earlier 3.4% increase
WTI crude oil gapped higher over the weekend on confirmation that the OPEC will be extending its output cuts
Japanese government considers declaring an official end to deflation
Australia’s MI inflation gauge slipped 0.1% m/m in February after earlier 0.3% increase
Australia’s ANZ job advertisements tumbled 2.8% m/m in January after earlier 3.4% increase (upgraded from initially reported 1.7% gain)
Australian building approvals fell 1.0% m/m in January instead of estimated 3.8% gain, after earlier 10.1% slump (downgraded from initially reported 9.5% decline)
Australia’s company operating profits jumped 7.4% q/q in Q4 2023 vs. projected 1.1% gain and previous 1.6% drop but inventories fell 1.7%
Price Action News
Overlay of AUD vs. Major Currencies Chart by TradingView
The Aussie was off to a rough start this week, as headline economic figures came in mixed but traders seemed to be pricing in a downbeat GDP report for Wednesday.
The ANZ job advertisements report chalked up a steep decline, suggesting fewer hiring opportunities in the coming months, while the company operating profits report pointed to weaker inventory levels that could dent overall growth figures for Q4 2023.
AUD slumped the most against its European counterparts, the euro and franc, while fighting to stay afloat against the yen and Loonie.
Upcoming Potential Catalysts on the Economic Calendar:
Swiss CPI at 7:30 am GMT
Tokyo core CPI at 11:30 am GMT
New Zealand ANZ commodity prices at 12:00 am GMT
U.K. BRC retail sales monitor at 12:01 am GMT
Chinese Caixin services PMI at 1:45 am GMT
BOJ Governor Ueda’s speech at 4:00 am GMT
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 15-min Forex Chart by TradingView
Check out this textbook trend setup on the short-term chart of GBP/AUD!
Disappointing economic figures from Australia pushed the pair to the top of its channel, which lines up with the 61.8% Fibonacci retracement level.
After all, AUD traders might be on the lookout for a potential GDP contraction that could ultimately convince the RBA to shed its hawkish feathers and join the rest of the dovish central banks in considering a rate cut.
Prior to that, though, the spotlight might stay on the Chinese economy as it prints its Caixin services PMI in the next Asian trading session. Analysts are expecting an uptick from 52.7 to 52.9, and upbeat results might be enough to boost the Aussie again.
If that’s the case, the channel top might keep holding as a ceiling, pushing GBP/AUD back down to the lows at 1.9362 or the channel bottom closer to the 1.93650 minor psychological mark.
On the other hand, a break above the Fibs and R1 (1.9400) might be enough to signal a reversal from the short-term downtrend. In that case, GBP/AUD might set its sights on the next bullish target at R2 (1.9510) next.
Do you think the trend is still our friend on this pair?