Last week, we reviewed the market-moving risk events. we particularly focused on the political uncertainty in Europe.
In this article, we will review this week most market-moving risk events. We will be particularly focused on AUD due to the release of several key Australian events.
Three potential trading opportunities:
The first trading opportunity for AUD will be from Australian Retail Sales.
The second trading opportunity will be from the RBA’s June policy decision. This has the potential to not only move AUD in the short-term but also shape its fundamental outlook.
The third trading opportunity will be from Australian GDP. This event also has the potential to influence AUD’s fundamental outlook.
AUD RETAIL SALES.
Retail Sales, measure the change in the total value of inflation-adjusted sales at the retail level.
It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.
AUD Retail sales for april will release at 19.00GMT. This includes, GDP forecasts business inventories, total wages.
Market consensus is for a print of 0.2% compared to March’s 0.0%.
With that said, Retail Sales has tended to deviate quite significantly in the past. So, the opportunity here will be catching any strong deviation from expectations.
A significant positive deviation should see AUD strengthen. In this scenario, we would consider a short-term AUD long position.
a significant negative deviation should see AUD weaken. This would provide a short-term short position.
GBP – Construction PMI
purchasing managers index are economic indicators derived from monthly surveys of private sectors.
Market focusing on the positive headline, supporting GBP across the board.
A positive Construction PMI could support GBP and see the positive sentiment continue. But, a disappointing report could see GBP weaken and pare its Friday gains.
If the report prints as expected, we would see no clear bias for GBP and turn our attention to Services PMI.
AUD – RBA Monetary Policy Decision
The RBA’s June monetary policy decision will likely be the highlight of the week.
This event will provide second opportunity for AUD and help to shape the fundamental.
Any change from the RBA’s neutral tone could influence rate hike expectations and AUD.
A hawkish tone should favour AUD, especially if the market brings forward. This would improve AUD’s fundamental outlook and provide an AUD long opportunity.
If the RBA are dovish, AUD is likely to weaken and rate hike expectations could get pushed back. This would see AUD weaken, providing a short opportunity.
Of course, if there are no changes to the RBA’s statement, AUD’s fundamental outlook will remain unchanged. This will likely mean that there will be no high conviction trading opportunity.
GBP – Services PMI
Service PMI also like constructive PMI.
Market consensus for May is for a print of 53.0 compared to April’s 52.8.
A disappointing report, especially one below March’s 51.7 would be particularly negative. This would likely see GBP weaken across the board, providing a short opportunity.
If the report is positive,GBP will likely remain supported. Especially if Monday’s Construction PMI was also positive.
This would likely provide an excellent GBP long opportunity.
AUD – GDP
GDP is a another key event, which has power to influence AUD.
Market consensus for an positive GDP report with GDP Q/Q expected at 0.8% and GDP Y/Y expected at 2.7%. This compares to Q4 2017’s readings of 0.4% and 2.4% .The above expectations would suggest a particularly strong recovery from Q4 2017. This would likely support AUD and maybe even improve rate hike expectations.
If GDP does slow from Q4 2017, we would expect the market to push back rate hike expectations. This would likely provide an excellent AUD short opportunity.
CAD – Employment Report
This report will consist of two components, the Unemployment Rate and Employment Change.
Of the two, the initial reaction will likely come from Employment Change. This is because this component tends to deviate quite significantly from expectations.
For this reason, we want any deviation in Employment Change to be a result of Full-Time Employment.
On the Unemployment Rate, any significant deviation from expectations will likely influence CAD. But, this too could create volatility if it contrasts with the Employment Change.
With several key Australian risk events scheduled for this week, there should be some great opportunities to trade AUD.
But, there could also be some great opportunities from UK data and Canadian data too.
The goal of this article is to help you improve your understanding and ability to trade risk events.
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