A1 Trading Company

February 5, 2024

This Week's Trade Setups on AUD, NZD & CAD

Frank Cabibi

BOC Governor Macklem is set to speak on Tuesday while Australia announces their latest interest rate data and statements going forward. More jobs data comes out for New Zealand and Canada as well. Lots of volatility is expected this week for these currencies and the respective pairs containing AUD, NZD & CAD.

EdgeFinder Analysis

AUDCHF is the strongest bearish reading on the EdgeFinder right now. Today's cash rate is expected to remain the same at 4.35%, but investors are looking for any indication on the latest RBA statement. Although this year's rate cut is still under debate, investors are still hopeful there will be one in May.

Because of this forecast, AUD is weaker than CHF. COT is showing more demand for the Franc while the selling Aussie. Retail is the opposite despite large institutions getting increasingly bearish. February is historically a bad month for this pair as well.

CADJPY is still in a strong uptrend on the 1D timeframe as we approach tomorrow's BOC statement. There will also be employment numbers coming out this Friday. There are mixed expectations as Canada is expected to gain more jobs but with a higher unemployment rate.

We will get more insight on when Canada may cut rates this week, so any indication that they will be before USD could be a weak sign for the currency as a whole. Price is up against resistance and is starting the day lower. We may see a retest down to the trend line for support.

New Zealand has jobs data coming out as well. This Tuesday will be employment rate and unemployment rate with the expectations of a positive change q/q but a large increase in the unemployment rate. GBPNZD is a +9 on the EdgeFinder indicating strong bullishness in the pound over the kiwi.

Retail sentiment is majority short this pair, but the EdgeFinder still has its bullish perspective. There is no news in the UK this week, so the main driver of sentiment will depend on where these jobs numbers land tomorrow. If the UE rate does come in hotter, we can likely expect a weaker kiwi.

Retail Spotlight

Retail is majority short GBP and CHF. Three AUD pairs are in the buy territory from the crowd's perspective too. CAD appears to be mixed.

Smart Money Spotlight

More mixed sentiment rolls in this week as the major indices in the US are being both bought and sold. CAD saw a 4% change to the long side as oil saw nearly 1.5% change long. Meanwhile, SPX, gold, dollar, AUD and JPY are getting sold.

Fundamental Spotlight

US PMI data is now complete with services PMI this morning coming in higher than expected. Although still lower than last year's number, we are still seeing growth with a 53.4 Services PMI. Higher PMI from both services and manufacturing is a sign for strength in the dollar.

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