Despite a quiet holiday environment, we’ve actually got a potential short-term setup in the works on AUD/JPY ahead of top tier Chinese data.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 13249.01 -0.66% FTSE: 7594.59 -0.66% S&P 500: 3221.36 -0.58% DJIA: 28453.46 -0.67% |
US 10-yr 1.917% +0.044 Bund 10-YR -0.181% +0.075 UK 10-YR: 0.86% +0.104 JPN 10-YR: -0.017% -0.012 |
Oil: 61.75 +0.05% Gold: 1518.40 +0.02% Bitcoin: 7258.21 -0.92% Etherium: 130.45 -2.20% |
Fresh Market Headlines & Economic Data:
- China’s Liu He to sign Phase 1 trade deal in U.S. this week
- Oil rises to three-month high on upbeat data, Middle East tension
- China’s 2019 retail sales to rise 8%: commerce ministry
- U.S. Goods Trade Deficit Declines to Smallest in Three Years
- U.S. pending home sales rise 1.2% in November
- UK mortgage approvals hit almost three-year high in November: UK Finance
- BoE’s Carney says finance must act faster on climate change
- ECB’s Schnabel opposes pumping cash into green assets, Boersen-Zeitung reports
- The KOF Economic Barometer rises by 3.8 points in December from 92.6 (revised from 93.0) to a value of 96.4.
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- China Manufacturing & Services PMI at 1:00 am GMT (Dec. 31)
- U.S. Home prices at 2:00 pm GMT GMT (Dec. 31)
- U.S. Consumer confidence at 3:00 pm GMT (Dec. 31)
What to Watch: AUD/JPY
Looking for some last minute pips? Well, AUD/JPY might be the market to check out with a potential rise in volatility, especially for the Aussie, coming with the latest Chinese PMI data on deck. This data typically can be a short-term market mover, and with a low liquidity environment, the chances of a spike in price is elevated.
On the one hour chart of AUD/JPY above, we can see the pair has been in a steady uptrend this holiday season, rolling with the positive risk-on vibes lifting the equity markets higher like the imminent signing of the Phase 1 U.S.-China trade deal and the very high odds of interest rates remaining very low in the coming new year. The move was enough to break above the early December swing high just under the 76.00 handle, and now with global risk sentiment and AUD/JPY pulling back ahead of the end-of-year (possibly on profit taking), AUD/JPY could draw in short-term buyers at the broken resistance area.
If you’re a bull on AUD/JPY and the Chinese PMI data surprises us with better-than-expected/previous reads, that broken resistance area becomes a highly probable short-term support area. Watch out for bullish reversal candles around the 76.00 area.
If the Chinese PMI disappoints, then that could hit not only the Aussie, but short-term global risk sentiment. A break below the rising ‘lows’ pattern on the news could draw in more sellers, and with a daily ATR of around 40 – 45 pips, 75.00 – 75.50 could be the next downside target.