A potentially big event ahead for the Australian dollar could change this slow grind higher in AUD/JPY into a strong short-term breakout play.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 13009.79 -1.71% FTSE: 7301.51 -0.61% S&P 500: 3114.17 -0.85% DJIA: 27844.20 -0.74% |
US 10-yr 1.828% +0.052 Bund 10-YR -0.279% +0.077 UK 10-YR: 0.747% +0.048 JPN 10-YR: -0.108% -0.005 |
Oil: 56.05 +1.60% Gold: 1468.00 -0.32% Bitcoin: 7315.46 -0.80% Etherium: 148.60 +0.75% |
Fresh Market Headlines & Economic Data:
- Markit’s November PMI at seven-month high amid stronger upturn in new orders, while ISM PMI shows the US remains in contraction territory
- Modest recovery in Canadian manufacturing performance continues in November
- UK PM Johnson’s Conservatives maintain seven-point lead over Labour: ICM poll
- UK manufacturing contracts as political and economic uncertainty continues
- Oil jumps above $61 on talk of further OPEC+ supply curbs
- Eurozone manufacturing PMI improves to three-month high, but signals ongoing contraction
- Fastest rise in French manufacturing output for five months
- Swiss retail trade turnover rose slightly in October 2019
- Australia building approvals nosedived by a shockingly large 8.1% in October
- Aussie manufacturing output hits 3-year low
- Australian Job ads fall 1.7% in November: ANZ
- Sharper fall in exports drives further Japanese manufacturing deterioration
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Australia Current Account at 12:30 am GMT (Dec. 3)
- Reserve Bank of Australia Interest Rate decision at 3:30 am GMT (Dec. 3)
What to Watch: AUD/JPY
For the first U.S. session watchlist post of the week, we’re checking out AUD/JPY ahead of the latest monetary policy and interest rate decision from the Reserve Bank of Australia. Like most other monetary statements from central banks, this is likely to be a market mover, but with expectations of the RBA holding at 0.75% at this meeting, any spike in volatility will likely be short-term.
On the one hour chart above of AUD/JPY, we can see the pair has been slowly grinding higher over the last week or so after bottoming out around 73.50. And during this move, the market managed to break above a minor resistance area around 74.25 and seems to be holding for now.
If you’re a bull on AUD/JPY, then the scenario to look out for later is the RBA holding off on rate cuts and giving us some positive comments on the economic outlook, which is a low probability situation at the moment given some recent weak economic updates like Australian manufacturing sentiment and building approvals seen earlier today.
If you’re a bear on AUD/JPY, a rate cut and/or dovish rhetoric from the RBA on Australia’s economy will like spark some Aussie selling, and if the U.S.-China trade story turns further negative (e.g., further retaliation against the U.S. Hong Kong bill support protesters), it’s likely we’ll get a momentum move to the downside, probably enough to break the rising ‘lows’ pattern, which could draw in more sellers for a swing position.
