We’ve got a busy forex calendar ahead for the Aussie, which makes this consolidation pattern one to watch on AUD/JPY ahead of top tier events.
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Fresh Market Headlines & Economic Data:
Wall Street sell-off picks up steam, Dow falls 400 points to cut into November’s big gain
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Moderna plans to seek U.S., EU clearance for covid vaccine
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Chicago PMI eased to 58.2 in November vs. 61.1 in October
Canada Building Permits Fall 14.6% in October
Time is running out for Brexit trade deal, EU and Britain warn
EU negotiator Barnier says Brexit trade negotiations are an ongoing process
Spain November flash harmonised CPI -0.9% y/y vs -0.9% in October
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The KOF Economic Barometer declined in November to 103.5 points, 2.8 points lower than in October
Swiss retail trade turnover rises in October
New Zealand Business confidence hits highest level since Jacinda Ardern took power
Japan factory output grows for fifth month; retail sales surge
Japan’s housing starts dropped by 8.3 percent year-on-year in October 2020
Upcoming Potential Catalysts on the Economic Calendar
Australia Manufacturing Index at 9:30 pm GMT
Australia Markit Manufacturing PMI at 10:00 pm GMT
Japan Unemployment Rate at 11:30 pm GMT
Australia Building Permits, Current Account at 12:30 am GMT (Dec. 1)
Japan Manufacturing PMI at 12:30 am GMT (Dec. 1)
China Caixin Manufacturing PMI at 1:45 am GMT (Dec. 1)
RBA Interest Rate decision at 3:30 am GMT (Dec. 1)
What to Watch: AUD/JPY
On the one hour chart above of AUD/JPY, we can see the pattern has been in consolidation mode over the past four sessions as last week was a bit of a snoozer for both the Aussie and yen.
This next session or two could be a much different story with economic / sentiment updates coming from both Australia and Japan, most notably the latest monetary policy statement from the Reserve Bank of Australia. Expectations are for the RBA to hold off on any new policy changes, but of course, if there is a surprise then the Aussie can get moving very quickly.
So for the bulls on AUD/JPY out there, considering buying on an upside break of the consolidation area if the RBA if we see a combination of negative Japanese PMI data against positive Australian manufacturing updates, and rhetoric from the RBA that negative rates are not in sight at this time.
This scenario could draw in buyers, and with a daily ATR of roughly 60 pips, we could see momentum head up to the next potential resistance area around the 78.00 major psychological handle.
For the bears on AUD/JPY, talk of more stimulus measures like negative rates from the RBA could send the pair lower, especially in combo with weak Australian manufacturing updates.
This scenario would likely lead to a downside break, especially if broad risk sentiment remains negative as we’re currently seeing in the U.S. session. If so, watch for a move towards the 76.00 handle, possibly further lower if pandemic / lockdown / geopolitical fears continue through the next session. The risk rally that emerged between mid-November to now could unwind quickly.
