AUD/JPY hits the top of the watchlist as the pair forms a classic consolidation setup on the one hour chart.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/CAD on oil’s possible rebound, 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: 10546.46 +0.68% FTSE: 5957.12 -0.05% S&P 500: 2797.79 -2.93% DJIA: 24144.21 -3.49% |
US 10-yr 0.705% -0.044 Bund 10-YR -0.763% +0.039 UK 10-YR: 0.276% +0.037 JPN 10-YR: -0.07% -0.041 |
Oil: 33.53 -2.42% Gold: 1658.50 -0.10% Bitcoin: 7855.21 -1.04% Etherium: 197.00 -2.37% |
Fresh Market Headlines & Economic Data:
- The Bank of England cut rates by 0.5% in an emergency coronavirus response, mirroring the Fed
- US consumer prices grew 0.1% in February as food costs rose
- U.S. commercial crude oil inventories increased by 7.7 million barrels from the previous week
- Canadian industries operated at 81.2% of their production capacity in the fourth quarter, down from 81.5% in the previous quarter.
- Futures fall as investors wary of U.S. response to virus
- Joe Biden calls for unity after big wins in Michigan, three other states
- UK gross domestic product (GDP) was flat in the three months to January 2020
- UK industrial production output continues to fall
- UK announces five billion pound emergency response fund for coronavirus
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- U.S. Monthly budget statement at 6:00 pm GMT
- Japan PPI, Foreign investments at 11:50 pm GMT
- Australia Consumer inflation expectations at 12:00 am GMT (Mar. 12)
What to Watch: AUD/JPY
Not much on the calendar ahead as far as big potential volatility catalysts, but we do have mid-tier reports from both Japan and Australia that may get AUD/JPY moving. The pair has actually been tightening up price action over the past few sessions, consolidating around the 68.00 handle, which is a setup for a potential breakout play ahead. So, it’s being kept simple for traders ahead as we don’t really need to have a short-term directional bias, we just need to get ready to move if the pair breaks.
For the bears, a break below the rising ‘lows’ in combination with weak Aussie consumer inflation expectations and better-than-expected Japanese PPI data is the signal for traders to get interest in a short position, especially if global risk sentiment is still in risk-off mode. With a daily ATR of around 130 pips, the Tuesday lows around 67.00 is a reasonable target and decent short-term R:R if using the ATR as a stop guide.
And vice versa for the bulls, a break above the falling ‘highs’ combined with positive Aussie inflation data and weak Japanese PPI data is a signal to work on a long position, especially if we see positive updates in the coronavirus story and/or more government stimulus news to combat the coronavirus. That’s such a low probability right now that if it did play out, the move higher should be pretty strong in the short-term. Targeting the major psychological handle of 70.00 is a reasonable target in this scenario for a better than 1:1 potential short-term return-on-risk.