It’s a bit of a slow start to the trading week since U.S. markets are closed for the holiday.
Can we catch volatility on this yen pair instead?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
People’s Bank of China kept medium-term lending facility (MLF) rate unchanged at 2.50% as expected
New Zealand BusinessNZ services PMI returned to expansion from 48.8 to 52.1 in January, its highest level since May 2023Japanese Finance Minister Suzuki hints of interest rate increase but refrains from specifying a timeline
Japanese core machinery orders increased by 2.7% m/m in December as expected vs. earlier 4.9% slump
U.K. Rightmove HPI slowed from 1.3% month-over-month gain to 0.9% in January
Price Action News
Overlay of NZD vs. Major Currencies Chart by TradingView
It was a subdued trading session for the majors on Monday since there were no major reports on deck, plus U.S. and Canadian markets are closed in observance of President’s Day.
The only major announcement came from China, with the PBOC deciding to keep the MLF rate on hold at 2.50% as expected. Still, there was some chatter of a potential cut to the prime loan rate for tomorrow’s announcement, allowing Asian equity markets to stay in the green.
The Kiwi managed to edge higher versus its counterparts, though, likely buoyed by the return of New Zealand’s services PMI to expansion.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. and Canadian markets closed for the President’s Day holiday
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
AUD/JPY: 15-min
AUD/JPY 15-min Forex Chart by TradingView
This Aussie pair is consolidating inside a small symmetrical triangle pattern, as traders are probably bracing for the PBOC prime loan rate setting and the release of the RBA minutes!
Which way will it go?
Rumor has it that the Chinese central bank will be cutting its 5-year loan rate, possibly triggering a wave higher for riskier holdings on additional stimulus. However, deciding to keep rates on hold might spur losses for higher-yielding assets and currencies.Meanwhile, the RBA minutes might contain fresh clues on the Australian central bank’s economic outlook and next policy moves.
Recall that officials kept rates on hold but kept the door slightly open for more tightening, as price pressures remain very elevated in the country.
A break above the triangle top could set off a test of R1 (98.35) then a rally that’s the same height as the formation, but a move below support could put AUD/JPY on track towards testing the downside targets at S1 (97.79) then S2 (97.47).
Whichever direction you choose to play, don’t forget to check the average AUD/JPY daily volatility before setting your entries and exits!
