Good morning Forex Kings,
The Coronavirus fears appear to have faded momentarily, the media has gone fairly quiet reporting further cases. This could be a matter of preventing wide spread fear. The US has advised against travel to China. Chinese media has also suggested cases at stage 1 should have a one week recovery period. Very mixed messages coming from China depending on where you get the information from. The fresh report this morning is suggesting the infected number has risen to 5500 and the death toll to 130 people.
Investment managers are also suggesting the market has over reacted to the outbreak, meaning we could see recovery across JPY currency pairs, as well as US indices and the AUD.
With that in mind the AUDNZD appears to be a low risk high reward trade set up.
Today, Australia will report is Consumer Price Index (CPI) which is a measure of inflation. A higher reading will be seen as bullish for the AUD, leading into next weeks RBA interest rate meeting. The market may begin pricing in an interest rate hold as data from Australia has been positive over the last couple of months. A turn around in the housing and employment market has cut the chances of a rate cut to roughly 30%. Another strong reading today could also cut the chances of a cut further.
Todays data is released at 11:30 am, therefore this trade needs to be placed before hand.
AUDNZD – Daily Charts
Bullish divergence on the RSI and double bottom on the daily candles.
AUDNZD – 4 hour candles
Trade Set Up: BUY Market Order – Stop loss 1.0280, take profit left open, but at least the 1.0400.
Stop loss: 51 PIPS
Take Profit: 69 PIPS