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AUD/JPY bears are back in control, but can they hold on with economic updates from both Australia and Japan in the upcoming Asia session?

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at GBP/USD ahead of U.S. PPI data and Fed Powell speech, 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: 16040.47 -0.04%
FTSE: 7274.04 -0.36%
S&P 500: 4685.19 -0.35%
NASDAQ: 15,889.99 -0.58%
US 10-YR: 1.444% -0.053
Bund 10-YR: -0.296% -0.002
UK 10-YR: 0.822% -0.002
JPN 10-YR: 0.059% +0.005
Oil: 84.36 +2.97%
Gold: 1,833.60 +0.31%
Bitcoin: $67,291.00 +1.8%
Ether: $4,771.59 +0.34%
Solana: $242.31  -2.16%

Fresh Market Headlines and Economic Data:

U.S. Producer Price Index rose +0.6% m/m in October; +8.6% y/y

Fed’s Kashkari: Keeping an ‘open mind’ on timing of rate hikes

France trade balance in third quarter of 2021: -€1.3B

ZEW Indicator of Economic Sentiment for Germany increased 9.4 to 31.7

Mastercard launches crypto-linked payments cards in Asia that allow holders to convert their crypto to fiat instantly

Bitcoin hits new all-time high above $68,000 as cryptocurrencies extend rally

Tim Cook says he owns cryptocurrency and he’s been ‘interested in it for a while’

Upcoming Potential Catalysts on the Economic Calendar

Japan Tankan Index at 11:00 pm GMT
Australia Consumer Confidence at 11:30 pm GMT
Australia Building Permits at 12:30 am GMT (Nov. 10)
China Inflation Rate at 1:30 am GMT (Nov. 10)
Japan Machine Tool Orders at 6:00 am GMT (Nov. 10)
Germany Inflation Rate at 7:00 am GMT (Nov. 10)
Bundesbank Weidmann speech at 9:00 am GMT (Nov. 10)
Italy Industrial Production at 9:00 am GMT (Nov. 10)

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 above of AUD/JPY, we’ve got a very clear downtrend in play with volatility picking up over the last trading session, a pattern that may draw in further bears after that two day consolidation around the 84.99 handle.

Volatility may still stay bid for the pair with economic updates from both Australia and Japan on the forex calendar, as well as inflation data from China that could have an influence on broad market sentiment. 

Expectations are of course for the trend of stronger inflation data to continue as it has around the world,  and if this plays out, then it’s possible the Aussie could outperform the yen in the short-term, especially if we see improved consumer sentiment from Australia and disappointing Japanese data. That makes the upside trendline break the setup to watch out for for a potential short-term counter trend move higher.

But if we see the lower probability scenario of a  weaker-than-expected Chinese inflation data update, then that would be a surprise that could really get AUD/JPY moving.

This scenario makes sense for a short play, and the odds of success and potential return-on-risk look good if the market bounces before the event; this is actually suggested by the stochastic indicator showing possible oversold conditions.

If we see a retest of the falling trendline marked on the chart above, which intersects with the broken consolidation area around 84.00, then we’ll be on the lookout for bearish reversal patterns for a potential short-term or swing position with the current trend lower.