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What’s crackin’ forex fiends! We’ve got the latest monetary policy statement from the Reserve Bank of Australia coming soon to rock Aussie positions, making the consolidation in AUD/JPY one to watch for potential short-term moves!

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at USD/CAD as it retests a major support area, so be sure to check that out to see if there is still a potential play!

Intermarket Update:

Equity Markets Bond Yields Commodities & Crypto
DAX: 15036.55 -0.79%
FTSE: 7011.01 -0.23%
S&P 500: 4300.46 -1.30%
NASDAQ: 14255.49 -2.14%
US 10-YR: 1.484% +0.017
Bund 10-YR: -0.216% +0.001
UK 10-YR: 1.007% -0.004
JPN 10-YR: 0.051% -0.01
Oil: 77.63 +2.31%
Gold: 1,769.20 +0.61%
Bitcoin: $49,356.50 +1.09%
Ether: $3,408.74 -1.75%

Fresh Market Headlines & Economic Data:

Biden pushes Congress to raise debt limit this week, urging GOP to ‘just get out of the way’

Fed’s Bullard: U.S. businesses having no problems raising prices

U.S. factory orders gain steam as manufacturing keeps humming

Euro zone ministers expect inflation to slow in 2022

The total value of building permits in Canada decreased 2.1% to $9.7 billion in August.

French government sees annual growth at 1.4% form 2024 onward

Spanish unemployment fell by 76,113 people, the largest decrease in a month of September and accumulates seven consecutive months of falls

Sentix Investor Confidence: 16.9 in October vs. 19.6 in Sept.; Loss of momentum continues

Swiss retail trade turnover rises in August

Swiss consumer prices remained stable in September

Upcoming Potential Catalysts on the Economic Calendar

Australia Construction Index at 9:30 pm GMT
Australia Services PMI at 10:00 pm GMT
Tokyo CPI at 11:30 pm GMT
Australia Trade Balance at 12:30 am GMT (Oct. 5)
Japan Services PMI at 12:30 am GMT (Oct. 5)
Reserve Bank of Australia monetary policy statement at 3:30 am GMT (Oct. 5)
Various European Services PMIs starting 7:15 am GMT (Oct. 5)
Euro area Services PMI at 8:00 am GMT (Oct. 5)
U.K. Services PMI at 8:30 am GMT (Oct. 5)
Euro Area PPI at 9:00 am GMT (Oct. 5)

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: AUD/JPY

AUD/JPY 1-Hour Forex Chart
AUD/JPY 1-Hour Forex Chart

On the one hour chart of AUD/JPY above, we’ve got a pretty simple range setup happening as the market has been steadily moving sideways between the 80.00 – 81.00 handles. That pattern may possibly change in the upcoming Asia / London trading session as we’ll get the latest monetary policy statement from the Reserve Bank of Australia.

Expectations are pretty low that we’ll see any change to policy (likely to hold the cash rate at 0.10%), so traders will be mainly watching for comments on when the RBA will end their asset purchasing program. It’s likely that with recent economic updates from Australia showing some strength (Australian Growth accelerates for the Australian manufacturing sector in September, AU inflation and wage expectations higher in September) and the potential for Australia to reopen borders next month, the RBA may not be as willing to delay the taper further.

We’ll just have to wait and see, but in a situation where they do not delay taper further, we could see a pop higher in the Aussie, which would be in line with the short-term trend higher. A sustained break above the 81.00 – 81.50 area could draw in buyers, both longer-term and shorter-term, especially if broad risk sentiment leans positive in the upcoming session.

Of course, we’ve got to consider a taper delay as a possibility, especially with some figures like Australian jobs and retail sales showing weakness over the past few months. In that scenario, a bearish reaction in the Aussie could take AUD/JPY lower to break the consolidation pattern and draw in momentum sellers in the process. And if broad risk aversion continues to remain negative, then the Japanese yen could lead the way on the session and take AUD/JPY to the 79.50 – 80.00 area.