Markets opened up quietly in the Sydney session and is expected to remain relatively quiet until traders establish a more definite understanding of Trump’s policy stance on fiscal spendings and taxation.
Despite last week’s economic data indicating weaker new home sales growth and consumer sentiment, it remains within a healthy pace of growth.
Current trade setups I’m monitoring for the week and ahead of the 8:30am Core Durable Goods release are as follows.
Over on the daily time-frame, the AUDUSD rally has stalled and began ranging for the past few days. Downside pressure is expected to come in going forwards for two considerations.
- Continued strong economic data is on par for another rate hike
- Trump’s tax policy is expected to (possibly heavily) favor U.S. corporations
The rally in the Australian Dollar has been tied to the performance of gold as investors flocked to safer investment instruments upon the Dollar uncertainty. The correlation between gold and the Australian Dollar continues to remain strong as indicated below.
In the short-run, a period of the next two weeks, Dollar bulls are expected to resume following Trump’s tax policy proposal, Yellen speech, and the Non-Farm Payrolls he week after.
Daily technical setup for GBPUSD continues to remain bearish as it threatens an accelerated sell-off in the days to come. The 20-day and 65-day moving averages indicate a strong break-away from this consolidation experienced in this past month.
Over on a lower time-frame, this pair is currently making another leg lower making a strong break-out in this consolidation setup. Momentum is expected to continue for the months ahead as traders are expected to accumulate U.S. Dollar positions as Brexit proceeds.
Currently, no other pairs are emphasized are due to a lack of clear sentiments. Stay tuned for more setups.