The AUD/USD has broken above a key resistance level at the 0.75 handle after the pair saw a quick recovery from a drop of approximately 60 pips on the open. The move to the upside appears to have coincided with a push higher in Asian stock prices, which could suggest that the sentiment linked currency managed to see through a yet undecided election in Australia to track stocks higher.
Today is a holiday in the United States, which might imply lower liquidity in the next couple of trading hours, possibly making for more difficult trading conditions. Activity might pick up later as we approach a number of event risk in Asian trade headlined by the RBA’s rate decision, which could potentially see a significant response by the pair.
Taking this into consideration, we look to find short term trading opportunities using the Grid Sight Index (GSI) indicator.
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Australia’s Trade Balance is set to hit the wires first at 01:30 GMT. The print is expected to show net export deficit expanded to -1.7b versus a -1.579b prior print, which was the lowest reading since February 2015.
Australia’s Retail Sales is on the docket as well. The seasonally adjusted month-on-month figure is expected to show that store purchases increased in May by 0.3% versus a 0.2% prior print. Higher Retail Sales might suggest inflationary pressures, which could reduce the need by the RBA to further cut rates. In turn, this might potentially be seen as a hint to the upcoming rate decision slightly after.
China Claxin PMIs could have an impact on the pair as well given China and Australia close trading relations. A pickup in activity, which could potentially be derived from the PMI figures, might suggest reduced risk of a downturn in the Chinese economy, thus proving supportive for the Australian Dollar.
With that said, follow through on any significant beat or miss to expectations to these scheduled releases might prove limited this time as participants could potentially hold back before the “main event†slightly after, which is the RBA’s rate decision.
