We’ve got a steady stream of economic updates from Australia, Japan and China that could turn the consolidation in AUD/JPY into a breakout opportunity!
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Fresh Market Headlines & Economic Data:
- February U.S. pending home sales jump over 9% annually, ahead of major coronavirus impact
- China unexpectedly cuts reverse repo rate by most in five years to support virus-hit economy
- Oil Plummets to 17-Year Low as Broken Market Drowns in Crude
- Germany: Coronavirus spreading too fast for us to loosen restrictions
- German inflation slows below ECB target in March on cheaper oil
- Spanish CPI m/m for March: -0.3%; 0.1% y/y
- UK mortgage approvals hit six year high in February, before virus hit
- Swiss economic indicator plunges to lowest level in 5 years
- Swiss National Bank’s liquidity injections trigger sight deposit leap
- Treasurer Josh Frydenberg details JobKeeper scheme of $1,500 per fortnight for businesses to pay employees
- RBNZ to buy more government bonds, as well as corporate and asset-based securities to support liquidity in the corporate sector
- Abe pledges Japan’s “boldest-ever” economic stimulus to fight virus
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- U.K. Consumer confidence at 11:01 pm GMT
- Japan Industrial production & Retail sales at 11:50 pm GMT
- Australia New Home sales at 12:00 am GMT (Mar. 31)
- Australia Private sector credit at 12:30 am GMT (Mar. 31)
- China Non-manufacturing PMI at 1:00 am am GMT (Mar. 31)
- Japan Housing starts & Construction orders at 5:00 am am GMT (Mar. 31)
What to Watch: AUD/JPY
Keeping it simple for the first watchlist post of the week, and one of the last for a very crazy month of March! This time it’s on AUD/JPY, a pair that has been consolidating over the past three trading sessions, converging around the 66.50 handle. Now that we’re past the initial Coronavirus pandemic panic and awaiting more data on cases and the economic impact, it makes sense that traders are taking a breather from probably the most volatile month we’ll ever see in our lives….”probably” because no one knows what’s coming down the road!
Anyways, this sets up for a potential “consolidation-breakout” play with potential catalysts ahead from Japan, Australia and China coming soon. The data from China is likely the market mover out of the three, but remember that Coronavirus updates will likely take precedent over economic ones if there is a big one.
So again, it’s a simple set of scenarios to watch out for in the Asia session. If you’re a bull on AUD/JPY, wanting to play today’s risk-on sentiment, then watch out for better-than-expected Aussie & Chinese data, combined with worse-than-expected Japanese industrial production data. If this produces an upside breakout of the upper falling trendline, then traders may jump into long positions to play for short-term pips.
If you’re bear on AUD/JPY, likely on expectations of more negative news to potentially weigh on risk sentiment AND/OR weaker-than-expected Aussie/Chinese data vs. a better-than-expected or inline Japanese data update, then watch out for a downside break of the rising bottom trendline for a potential short-term bearish play.