GBP AUD

Risk aversion and technical setups are driving bullish momentum in GBP/AUD and EUR/AUD, but mixed signals demand confirmation before chasing moves.

AUD/USD has made a mild attempt to move higher this week, yet higher timeframes continue to suggest a move towards 62c. And that could see GBP/AUD have a crack at the 2020 highs over the near term, though I'm also keeping an eye out for a cycle top and pullback.

Amid global volatility, key levels on these Aussie crosses continued to be respected. We look at potential setups as we enter the new trading week.

There’s a lot of excitement in Chinese markets about the latest stimulus measures to address flagging economic growth. Given it’s often used as a proxy for those traders looking to play China without directly investing in China, this type of environment should benefit cyclical currencies such as the Australian dollar.

GBP/AUD is rarely as overbought as it is right now. And when it has been this overbought in the recent past, it’s usually coincided with a near-term top.

Considering the rally in cyclical assets following the soft US inflation report, the steep reversal in AUD/USD comes across as a little strange. As long as economic growth holds up, the prospect of Fed rate cuts should provide tailwinds for cyclicals. Therefore, the reversal has created a short setup. But not against the US dollar.

Attempts to ram EUR/AUD and GBP/AUD into higher trading ranges failed last week, suggesting the Aussie dollar may be starting to rediscover its mojo against some major European crosses.

S&P global release their flash PMI reports for the major regions today. And with PMI reports from Europe and US, it places EUR/USD onto trader's radars.

China’s PMI beat expectations and expanded, which could give global growth prospects a boost as China continues to reopen

Gold enjoyed its best day in 8-months following the US inflation report and shows the potential to extend it run.

The pound is looking increasingly vulnerable against the Australian dollar despite the prospects of a 25-bps hike from the BOE today.

Whichever metrics of inflation we look at, it is hard to argue there isn’t more inflation set to come our way whilst commodities continue to rally.

It’s been a decent week for the dollar, but there is the potential for mean reversion as we head towards the weekend with 100 resistance looming.

UK inflation is expected to rise to 6% y/y today, and if we’re to see a strong inflation data set overall it could revive hopes of a less cautious BOE regarding future hikes.

With the exception of China, Asian equity markets tracked Wall Street higher overnight after Jerome Powell effectively removed concerns of an aggressive rate hike path.

A turbulent day across global equities made for a painful day in Asia, although Wall Street posted a sharp reversal heading into the close.

Volatility was surprisingly well contained overnight, given the rising levels of it leading into the US close. Do we simply move on, or is it the calm before the storm?