Tradable events for the week of June 4

June 4, 2018 08:57 AM

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Aussie dollar 

The week ahead is a big one for the Aussie dollar and it starts off quickly with Retail Sales among other economic data points Sunday night at 8:30 p.m. Central. Taking the cake is the Reserve Bank of Australia’s monetary policy meeting at 11:30 p.m. Central Monday night. Though rates are expected to stay unchanged, the RBA’s tone has stood firmly that the next move in rates is likely higher than lower. Any advancement in this rhetoric would be a very bullish catalyst for the Aussie dollar this week. Australia has worked through the U.S trade gauntlet to a satisfactory degree and has avoided being a casualty in the global trade picture. While Australia remains more or less unaffected, outside of some of their own tensions with their number one trade partner China, it is possible that they could actually become a beneficiary of the global trade standoff. It will be important to hear what the RBA has to say on trade. On a technical basis, the risk is to the upside. Flat out, the market has rejected attempts to keep price action under the .7500 mark, the lowest level in a year. Furthermore, traders have chased recent weakness. The Commitment of Traders shows that Leveraged traders have amassed a large net-short position for the second week in a row, but the Aussie has failed to move lower. The contract has regularly stood with a net-long position between 20,000 and 40,000 contracts since bottoming in January 2015. Each time the Aussie has incurred a net-short position in the ballpark of 10,000 contracts, it has ripped higher (-16,865 on 5/22 and -15,412 on 5/29). 

The U.S. dollar is a major component to any trade involving the Aussie; it is what the value of this contract is paired against. Nonfarm Payroll on Friday was very strong; Average Hourly Earnings came in better than expected at +0.3% versus +0.2% and job creation beat at 223k versus 189k. Also, ISM Manufacturing followed with a much stronger than expected read. On Thursday, PCE was arguably firm, beating low expectations MoM. Still, the Dollar failed to hold gains and the Dollar Index finished the week nearly 1% from its high. Furthermore, much of the recent strength in the Dollar Index was an illusion created by immense weakness in the Euro (57.6% of the Index) due to Italy, Spain and poor growth and inflation data. Fears surrounding Italy have cooled and Eurozone CPI crushed expectations last week with the headline coming in at 1.9% versus 1.6%. Additionally, of the eight most highly traded CME Currencies which are all paired against the U.S. dollar, according to the CFTC CoT, six show a Leveraged net-short position. This signals that sentiment for the U.S. dollar has again chased the trend, meaning its upside has likely become exhausted. 

Volatility will remain high for the Aussie given the economic calendar. However, a close above the recent swing high of .7607 will encourage a rip of more than 2% to major three-star resistance that aligns with the 200-day moving average at .7757-.7774. The Aussie has been trending lower since topping in January at .8135. Midway through this move, it last peaked at .7813 before legging lower and major three-star resistance aligns with a recovery to this level. 
 

Monday

U.K Construction PMI at 3:30 am CT

U.S Durable Goods and Factor Orders at 9:00 am CT

Aussie New Home Sales and Current Account at 8:30 pm CT

China’s Caixin Services PMI at 8:45 pm CT

 

Tuesday

Eurozone Services PMI, Markit Composite PMI and Retail Sales at 3:00 am CT

U.K Services PMI at 3:30 am CT

Draghi at 8:00 am CT

ISM Non-Manufacturing at 9:00 am CT

RBA Assistant Governor Bullock at 6:00 pm CT

Aussie Q1 GDP at 8:30 pm CT

 

Wednesday

U.S Trade Balance and Nonfarm Productivity at 7:30 pm CT

Canada Ivey PMI at 9:00 am CT

EIA Crude Oil inventories at 9:30 am CT

Aussie Trade Balance 8:30 pm CT

 

Thursday

Eurozone Q1 GDP at 4:00 am CT

Bank of Canada Governor Poloz at 10:15 am CT

Japan Q1 GDP at 6:50 pm CT

China Trade Balance – TBD

 

Friday 

German Trade Balance and Industrial Production at 1:00 am CT

U.K Manufacturing Production at 3:30 am CT

Canadian Employment Change 7:30 am CT

China CPI and PPI at 8:30 pm CT

About the Author

Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm. Bill has more than a decade of trading experience and focuses on developing trading strategies for both long and short-term trading approaches. Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER.  Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.