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We’ve got a little bit of choppiness with a little bit of risk-off lean in today’s session, but will it be short-lived in this “reopening” themed environment?

That could be the case, making this pullback in AUD/JPY one to watch ahead of Australian & Chinese data.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/CAD as the pair continues to range, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 12624.03 -1.53%
FTSE: 6338.47 -2.07%
S&P 500: 3214.07 -0.58%
DJIA: 27390.81 -0.66%
US 10-yr 0.82% -0.064
Bund 10-YR -0.319% -0.002
UK 10-YR: 0.321% -0.013
JPN 10-YR: 0.017% -0.024
Oil: 37.87 -0.84%
Gold: 1728.10 +1.34%
Bitcoin: 9732.21 -0.05%
Ethereum: 243.59 -0.44%

Fresh Market Headlines & Economic Data:

The U.S. NFIB small business optimism index rose to 94.4 in May from 90.9 in April

Job Openings and Labor Turnover Survey: The number of total separations decreased by 4.8M to 9.9M in April, the U.S. Bureau of Labor Statistics reported today.

US Wholesale inventories were up 0.3% m/m to $650B at the end of April

Canadian corporations reported net income before taxes of $74.3B in the first quarter (SA), down $46.5B from the fourth quarter of 2019.

German Exports in April 2020: -31.1% on April 2019

In April 2020, the French deficit increased significantly (+ € 1.8bn) after the sharp reduction in March (- € 1.7bn)

GDP down by 3.6% and employment down by 0.2% in the euro area

Johnson Continues U.K. Lockdown Easing But Retreats on Schools

UK says it will not budge on fishing rights in Brexit talks

Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:

API Crude oil stock change at 8:30 pm GMT

Japan Machinery orders & PPI at 11:50 pm GMT

Australia Consumer confidence at 12:30 am GMT (June 10)

Australian Home loans at 1:30 am GMT (June 10)

Chinese Inflation rate at 1:30 am GMT (June 10)

What to Watch: AUD/JPY

AUD/JPY 1-Hour Forex Chart
AUD/JPY 1-Hour Forex Chart

Global traders are leaning towards risk-off at the moment, possibly taking a pause (or maybe even profits) after a massive risk-on move over the past couple of months from the COVID panic bottom.

This includes the rally in AUD/JPY, which recently shot higher since the end of May by over 600 pips!

Today we’re seeing a pullback in the pair with the slightly negative shift in global risk vibes, now testing the 38% Fibonacci retracement area (around 74.50) of the latest swing move higher.

Is this an opportunity for the bulls to jump back in? Or is this a short-term move lower?

Well, if you’re a bull on AUD/JPY, the argument that support could be in this area may come from the upcoming Australian and Chinese economic updates.

We’ve got Aussie consumer confidence and home loan data, as well as Chinese inflation data, to potentially spark some volatility in the Australian dollar. If those data points continue to point to a recovery in that region, we could see short-term term buyers on this pullback.

If the opposite scenario plays out with the data, and broad risk sentiment continues to lean negative, then there may be a continuation of today’s shift lower.

A break below the 74.50 and new resistance forming at that area in this scenario may draw in seller for short-term profits, likely targeting the recent swing lows around 71.00.

Given the daily ATR of around 100 pips, that’s not a reachable target for the next session, so the 73.00 handle is a target to consider if looking for quick pips.