Starting off the new week with a look at AUD/JPY ahead of busy calendar ahead for both Australia and China!
Intermarket Snapshot
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US 10-yr 1.829% -0.014 Bund 10-YR -0.306% -0.015 UK 10-YR: 0.769% -0.005 JPN 10-YR: -0.004% +0.009 |
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Fresh Market Headlines & Economic Data:
- UK PM Johnson’s Conservatives poll lead jumps to 14 points: Survation
- Canadian Housing Starts Trend Essentially Unchanged in November
- The total value of building permits issued by Canadian municipalities decreased 1.5% to $8.3B in October.
- German exports rise in October, imports flat for a balance surprlus of 20.6B euros
- The sentix overall index for Eurozone rises by 5.2 points to +0.7 points.
- The Swiss unemployment rate rose from 2.2% in October 2019 to 2.3%
- Japan’s current account surplus rose 38% in October
- Japan upgrades third-quarter GDP as consumer, business strength absorbs hit from trade
- Japan November service sector mood recovers slightly from storm, tax hit
- New Zealand manufacturing sales improves to +0.9% q/q vs. -0.5% previous; manufacturing volumes fell 0.3% q/q
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- RBA Governor Lowe speech at 10:05 pm GMT
- Australia Business confidence & House price index at 12:30 am GMT (Dec. 10)
- China CPI & PPI at 1:30 am GMT (Dec. 10)
- RBA Assistant Gov. Bullock speech at 2:45 am GMT (Dec. 10)
What to Watch: AUD/JPY
With a likely quiet U.S. session ahead we’re looking to upcoming Asia session for potential short-term opportunities, and it looks like the odds are pretty good we may see some action. With RBA speeches and Chinese inflation data, it’s likely the Aussie will be on the move, especially if either of those events surprises the world with big unexpected reads.
For you bulls out there, the scenario to look out for is some hawkish (or not-so-dovish) comments from the RBA and/or better-than-expected inflation data from China. Not only are they positive for the currency, but also will likely have a risk-on effect as well. This makes AUD/JPY the pair to watch in this scenario and looking at the one hour chart above, we can see strong support around the 74.00 major psychological handle, which the pair has already bounce off of. A long entry strategy from there down to the next support area around 73.50, is something to consider for a short-term play with an attractive potential R:R when using the daily ATR (around 50 pips) as a stop guide and the previous swing high around 74.85 as a max target.
For the bears out there, a round of dovish commentary from RBA officials and/or weak inflation data from China will likely spark both Aussie weakness and risk-off sentiment, at which point a break and hold below the 74.00 handle is the technical signal to watch out for before considering a short position. Also, if the pair is testing the falling ‘highs’ pattern at this time, entry in that area should also be considered if that pattern holds for a potential short-term play, or even swing position if the 74.00 is broken afterwards.
