Commodities Corner: Aussie Following Black & Yellow Gold Higher ?
The Aussie is demonstrating nascent signs of stabilization. COT data has finally flipped net long for the first since 2015. Jut today net retail positioning has moved decidedly bearish net 70+% short as we test range resistance. From a data perspective the decline in domestic data appears to be showing signs of stabilization as Commodity prices also arrest from recent crashes. The confluence of evidence suggests it may be time to at least in the near term make a strategy shift in AUDUSD trading views.
Austrilan GDP growth increased by 0.6% in Q4. This was above the recent bearish lowering of the consensus expectation that went from 0.6% late last week to 0.4% as of yesterday. The better Q4 result was sugar coated by the upgrading of the 0.9% Q3 GDP growth result to 1.1%. Consequently, yearly GDP growth leapt back to around trend at 3.0%, well above the market’s expected 2.5%. The better than expected result came from stronger household consumption, machinery and equipment investment, inventories and a smaller GDP deflator when compared to forecasts. The volatile component of farm GDP also contributed positively (+1.6%) after two quarters of negative growth. Overall, the expenditure mix was healthy.
Technical & Trading Takeaway
From a technical and trading perspective the Aussie is positioned in a similar structure to the Crude chart we reviewed last week. We have a potential base developing. As with the Crude I am monitoring the price action looking for a base breakout and pullback to test former resistance as support, if this price pattern plays out I will be monitoring intra day reversal patterns to position for a broader correction/reversal.
As per the chart below if this move develops as anticipated there will be numerous trading opportunities which i will update over the coming weeks, first things first watch for the breakout.
For updates on trade of the day set ups and the other trades I am currently monitoring be sure to follow me on Twitter @LFXPatrick