Potential big time catalysts coming from Australia and Japan could make this uptrend pullback in AUD/JPY to setup to watch for the next session.
Before moving on, ICYMI, today’s Daily London Session Watch list looked at an opportunity forming on GBP/CAD ahead of U.K. inflation data, 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: 13311.22 -0.72% FTSE: 7512.88 -0.08% S&P 500: 3195.98 +0.14% DJIA: 28235.89 +0.36% |
US 10-yr 1.88% -0.009 Bund 10-YR -0.286% -0.014 UK 10-YR: 0.774% -0.05 JPN 10-YR: -0.009% +0.012 |
Oil: 60.81 +1.00% Gold: 1479.70 -0.05% Bitcoin: 6737.71 -2.21% Etherium: 128.60 -2.79% |
Fresh Market Headlines & Economic Data:
- Fannie Mae boosts 2020 U.S. housing forecast ‘significantly’
- Weekly US mortgage applications drop 5% as rates flatten
- Canadian Consumer Price Index rose 2.2% y/y in November, up from a 1.9% increase in each of the previous three months
- Canadian home prices rise in November, beating seasonal trend
- Oil falls as U.S. inventories rise but demand hopes stem bigger drop
- U.K. CPI comes in better-than-expected at 1.5% in November
- The headline rate of output inflation for U.K. goods leaving the factory gate was 0.5% on the year to November 2019
- The Price change for a property in the UK was 0.7% y/y in October; -0.7% m/m
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Fed Evans speech at 5:40 pm GMT
- New Zealand Trade balance, GDP at 9:45 pm GMT
- Japan Foreign investment at 11:50 pm GMT
- Australia New Home sales & Employment at 12:30 GMT (Dec. 18)
- Bank of Japan Interest Rate decision at 3:00 am GMT (Dec. 18)
What to Watch: AUD/JPY
As we can see above in the upcoming events summary, we’ve got top tier economic catalysts on deck from both Australia and Japan coming soon. The most notable of the bunch as a potential market mover is the Australian employment and new home sales update, with the BOJ monetary policy statement a likely market mover only if we see a big surprise from the BOJ.
This potential catalysts lineup brings our attention to AUD/JPY, which on the one hour chart above is bouncing higher from a broken previous resistance level / major psychological level (75.00) / Fibonacci retracement area. So from a technical standpoint, the bulls seem to be taking control at the moment, something that may be solidified later with a better-than-expected round of Aussie economic data and/or dovish commentary from the Bank of Japan. It’s probably a good idea to wait for these catalysts, but for the more aggressive trader types, building a long position from current levels down to 74.50 makes sense if you anticipate positive Australian data.
For the bears, improvement in the Australian employment environment is expected at the moment, so if we do get a weak update, it’s likely the Aussie will take a hit right off the bat. A sustain break below today’s lows (around 74.85) is the cue to start getting interested in a short position. And if global risk sentiment sours, consider a potential swing play, which has a good potential R:R if targeting the December lows (around 73.85) and using the daily ATR of around 50 – 60 pips as a stop guide.