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Checking out AUD/JPY for a short-term setup as risk sentiment turns negative and ahead of more data from Australia, likely to bring volatility to the Aussie.

Before moving on, ICYMI, today’s Daily London Session Watch list looked at an opportunity forming on GBP/AUD after a surprisingly less dovish RBA boosted the Aussie, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 13008.99 +0.34%
FTSE: 7166.57 -1.64%
S&P 500: 3075.98 -1.22%
DJIA: 27325.31 -1.65%
US 10-yr 1.721% -0.117
Bund 10-YR -0.34% -0.062
UK 10-YR: 0.691% -0.05
JPN 10-YR: -0.15% +0.024
Oil: 55.64 -0.57%
Gold: 1482.90 +0.93%
Bitcoin: 7343.21 +0.18%
Etherium: 148.35 -0.53%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • ECB Coeure speech at 5:30 pm GMT
  • Australia Services index at 9:30 pm GMT
  • Australia Composite PMI at 10:00 pm GMT
  • Australia GDP at 12:30 am GMT (Nov. 4)
  • Japan Services & Composite PMI at 12:30 am GMT (Nov. 4)
  • China Caixin Services PMI at 1:45 am GMT (Nov. 4)

What to Watch: AUD/JPY

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

Global risk sentiment turned sour today on geopolitical headlines that raised fears of a delay to the U.S.-China trade deal. This tends to be a good environment for Japanese yen bulls, so we’ll take a look there for a short-term play. We’ve also got a like economic calendar ahead of us, but what we do have could be a mover for the Australian dollar. Australian GDP and a read on China’s services sector are important indicators to watch, especially if we see further economic weakness, which could likely benefit the yen further.

So, if you’re a bear on AUD/JPY on the upcoming data points and global risk aversion sentiment, the play to watch out for is a break of the rising ‘lows’ pattern that goes back to the end of October. A break there AND weak Australia / Chinese data will likely draw in further selling, which has already kicked off today given the 60 pips drop (more than one daily ATR) since the Asia trading session. A hold below that pattern raises the odds that the next move would be to the October lows around 72.00 with the right catalysts.

If you’re a bull on AUD/JPY thinking that today’s price action is just a pullback, if the market can hold around the strong level of interest (74.25) then a bounce higher could be the next move if Aussie / Chinese data is better-than-expected and/or there is some trade tension relief between the U.S. and China.

This trade story is a very fluid one as we’ve seen all year, so stay on your toes with this type of trade and don’t be afraid to exit quickly if the story shifts out of your favor!