Partner Center Find a Broker

With economic events up ahead from Australia, China and Japan ahead, will the consolidation on AUD/JPY finally turn into a breakout?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD ahead of German & U.S. data, 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: 12331.44 -3.83%
FTSE: 5964.55 -2.72%
S&P 500: 3220.32 -1.17%
DJIA: 26117.59 -1.59%
US 10-YR: 0.543% -0.038
Bund 10-YR: -0.546% -0.047
UK 10-YR: 0.084% -0.036
JPN 10-YR: 0.018% -0.002
Oil: 39.32 -4.72%
Gold: 1,937.00 -0.84%
Bitcoin: 10966.54 -1.49%
Ethereum: 317.72 -0.10%

Fresh Market Headlines & Economic Data:

Dow futures drop 200 points amid record GDP decline, tech shares fall before big earnings

Second-quarter U.S. GDP plunged by worst-ever 32.9% amid virus-induced shutdown

U.S. weekly jobless claims rise for a second straight week, total 1.434 million

German GDP in the 2nd quarter of 2020 down 10.1% q/q

German Preliminary CPI read for July 2020 -0.1% m/m

German employment change in June 2020: -0.1% m/m, -1.3% y/y

UK worries about second COVID-19 wave in Europe, more quarantine steps possible

China pledges second-half policy support as faces complex economic situation

KOF Swiss economic barometer for July: 85.69 vs 60.65 in June

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

Japan Unemployment rate at 11:30 pm GMT

Japan Industrial Production at 11:50 pm GMT

China Services PMI at 1:00 am GMT (July 31)

Australia PPI, Private Sector Credit at 1:30 am GMT (July 31)

Japan Consumer Confidence, Housing Starts at 5:00 am GMT (July 31)

What to Watch: AUD/JPY

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

It’s been a sleepy market for AUD/JPY over the past few sessions, prompting price action to form a consolidation pattern on the one hour chart above. But we could be in for a breakout as risk sentiment flips negative on the session, enough to start to push AUD/JPY below the bottom of the range. 

For the bears out there, if we see negative Australia / China economic updates come out weaker-than-expected, not only culd that put pressure on the Aussie, but also add to negative global risk sentiment which would likely support the Japanese yen.

With  a stop above the consolidation range and target around the a daily ATR of around 70 pips, you’ve got a decent short-term potential return-on-risk, as well as a potential swing trade setup. That consolidation break could draw in longer-term traders and create momentum lower if risk sentiment stays negative.

For the bulls, it’ll likely take a combination of both better-than-expected Australian / Chinese data and positive global risk sentiment to draw in buyers on the pair.  If that scenario plays out, then watch out for a sustained break above the consolidation area before considering a long position.

Or if the pair is able to sustain above the 75.00 handle before the events, consider a long position at the market if we see positive data from that part of the world.