AUD/JPY may be set to see action ahead with a slew of Australian and Japanese data in the Asia session. Will it drive the pair to break its tightening pattern?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a technical setup on EUR/AUD, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
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Fresh Market Headlines & Economic Data:
Dow closes down 260 points at session low as megacap tech stocks turn negative
Yellen pushes higher taxes, stronger unions, more global competition to U.S. Chamber
U.S. home construction sees biggest drop since pandemic hit.
High lumber prices ease: Here’s what it means for homeowners and homebuyers
Fed’s Quarles says strong economic recovery underway, but not yet complete
UK jobless rate falls again, hiring up as lockdown eases
BoE’s Bailey sees no clear sign input prices are raising inflation
ECB’s Villeroy plays down inflation risks, says ECB policy should stay very accommodative
Euro area international trade in goods surplus €15.8 bn in March 2021
GDP down by 0.6% and employment down by 0.3% in
the euro area
Upcoming Potential Catalysts on the Economic Calendar
New Zealand Producer Prices at 6:45 pm GMT
API Crude oil stock change at 8:30 pm GMT
Australia Consumer Confidence at 12:30 am GMT (May 19)
Australia Consumer Inflation Expectations at 1:00 am GMT (May 19)
Australia Leading Index, Wage Price Index at 1:30 am GMT (May 19)
Japan Industrial Production at 4:30 am GMT (May 19)
U.K. Consumer Prices, Producer Prices, Retail Prices at 6:00 am GMT (May 19)
ECB Financial Stability Review at 8:00 am GMT (May 19)
Euro area Inflation Rate at 9:00 am GMT (May 19)
What to Watch: AUD/JPY
On the one hour chart of AUD/JPY above, we can see a potentially bullish technical signal begin to form as a higher ‘lows’ pattern forms over the last two sessions. This is forming in a longer-term trend higher, and coming against minor resistance around the the 85.00 major psychological level, making this area one to watch for an upside break.
That push higher may come with potential catalysts ahead from both Australia and Japan, but given that those catalysts are low-to-mid tier level events, it’s likely that we’ll need to see a strong update from both Australian consumer sentiment and wage prices for the Aussie to draw in enough buyers on low tier events.
Of course, there are two sides to a pair, and the yen has been a weak one against majors lately due to Japan’s underwhelming response to the pandemic recently. This could be enough to continue pressure on the yen in the short-term, and if we see weak Japanese industrial data disappoint, that may be enough to help drive AUD/JPY higher if we get positive Australian data.
Of course, if broad risk sentiment continues to sour due to inflation fears / rate hike speculation, they yen may benefit as traders continue to run from risk assets. If we see that environment and disappointing Aussie data, look out for a break of the rising ‘lows’ pattern before considering a short-term short position on the pair.
