With a lack of major catalysts schedule for the rest of the Monday session, we’re checking out AUD/JPY to play today’s overall gloomy sentiment.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/NZD as it hovers at its ascending channel support, 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: 13547.72 -0.01% FTSE: 7605.76 -0.60% S&P 500: 3321.99 -0.23% DJIA: 29266.94 -0.28% |
US 10-yr 1.774% -0.061 Bund 10-YR -0.246% -0.031 UK 10-YR: 0.634% -0.016 JPN 10-YR: 0.001% -0.01 |
Oil: 58.50 -0.07% Gold: 1555.90 -0.28% Bitcoin: 8654.79 +0.14 Etherium: 168.67 +1.45% |
Fresh Market Headlines & Economic Data:
- Leaders at Davos doubt China and US will reach a phase 2 trade deal by end of Trump’s term
- U.S. may grow more quickly this year than projections: Mnuchin
- Philadelphia Non-manufacturing Business Outlook Survey suggests continued expansion in activity in the region
- Canadian manufacturing sales declined 0.6% to $57.0B in Nov., the third consecutive monthly decrease
- U.K. employment grows by 208,000 as weekly earnings growth stays at 3.2%
-
Setback for Boris Johnson as Lords amend Brexit bill
German ZEW Economic Sentiment index rises significantly in January to 26.7 - Euro zone companies cut loan applications for first time in six years: ECB
- Global Dairy Prices are up +1.7% since Jan. 7
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Australia Westpac Consumer confidence at 11:30 pm GMT
What to Watch: AUD/JPY
On the one hour chart above of AUD/JPY, we can see the market reversed back to the downside at a minor level of interest (around 75.60) that was recently played both support and resistance this month. Today, it looks like resistance and it lines up with the falling ‘highs’ pattern going back a few sessions, making this a high probability of a legit reversal point.
Looking ahead, with a lack of any major catalysts ahead, this setup plays well with the current environment of negative risk sentiment that has flared today due to the rising Coronavirus fears coming out of Asia. This has pushed the Aussie to be the worst performer among the majors for the session, momentum that may continue to carry through the next Asia trading session if we don’t get hit with a surprise risk-on news event.
So, if you’re inline with this bearish framework on AUD/JPY, shorting at current levels up to the minor level of interest is a viable entry strategy, but the better potential return-on-risk lies in waiting for a retest of 75.60. With a daily ATR of around 55 pips, the next support level at the psychological level of 75.00 is reachable goal for the session if volatility stays bid.
