Risk-taking and strong jobs data could keep lifting the Australian dollar across the board.
Will bulls be strong enough to push for a neckline break?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/USD’s falling wedge pattern ahead of the FOMC decision and NZ GDP. 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:
FOMC kept rates on hold, signaled scope for three hikes in 2022
Fed head Powell: Real risk that inflation may be more persistent
New Zealand economy shrank 3.7% in Q3 vs. projected 4.1% contraction
Australian economy added 366.1K jobs in Nov vs. 203K forecast
Australia’s Oct jobs figure downgraded to show 56K drop in hiring
RBA head Lowe: No rush to hike interest rates for now
Japanese flash manu PMI down from 54.5 to 54.2
Australian MI inflation expectations rose from 4.6% to 4.8%
South Korea tightened restrictions to combat rising COVID-19 cases
BOE monetary policy decision and MPC minutes at 12:00 pm GMT
ECB monetary policy statement at 12:45 pm GMT
ECB press conference at 1:30 pm GMT
U.S. industrial production at 2:15 pm GMT
U.S. flash manufacturing & services PMIs at 2:45 pm GMT
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
Forex traders are in for another busy day, as two major central banks have policy decisions lined up.
I’m steering clear of the pound and euro, which might undergo extra volatility during the BOE and ECB decisions, and I’m looking at this risk sentiment play on AUD/USD instead.
The pair is forming an inverted head and shoulders pattern to hint that a reversal from its downtrend is due.
Price has yet to test the neckline resistance around the .7200 handle, and a break above this could be followed by a rally that’s the same size as the reversal formation.
The 100 SMA is above the 200 SMA to show that bulls have the upper hand, but Stochastic is turning lower from the overbought zone for now.
Still, I’m thinking Aussie bulls could keep charging since the Land Down Under just printed an impressive 366.1K gain in employment for November.
Besides, if risk-on flows carry on, the higher-yielding commodity currency could benefit while traders dump the safe-haven dollar.
