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We’ve got business sentiment updates from both Australia and Japan on the way, making this trend higher in AUD/JPY one to watch again for a session or two.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/AUD ahead of U.K. labor market data, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 13332.53 +0.83%
FTSE: 6496.99 -0.53%
S&P 500: 3662.18 +0.40%
NASDAQ: 12515.10 +0.60%
US 10-YR: 0.906% +0.015
Bund 10-YR: -0.615% +0.003
UK 10-YR: 0.248% +0.024
JPN 10-YR: +0.00% -0.02
Oil: 47.50 +1.09%
Gold: 1,854.60 +1.22%
Bitcoin: 19,409.81 +0.73%
Ethereum: 585.78 -0.37%

Fresh Market Headlines & Economic Data:

Dow rebounds, rising more than 100 points as new stimulus proposal unveiled

Oil rises above $50 as vaccine optimism offsets new lockdowns

New York Manufacturing Activity Decelerates Slightly in December — NY Fed

Treasury yields rise slightly as lawmakers continue stimulus talks

U.S. Industrial production increased 0.4% in November vs. 0.9% previous

U.S. import prices inch up 0.1% in November after dipping 0.1% in October.

In Q3 2020, French wages & salaries decreased by 3.4% and total labour cost index by 3.6%

In November 2020, the prices of frequently purchased French goods sold in hyper and supermarkets fell by 0.1% y/y

UK unemployment hits its highest since 2016 just as several parts of the country return to strict lockdown before the holidays

Upcoming Potential Catalysts on the Economic Calendar

U.S. Net Long-term Tic Flows at 9:00 pm GMT
API Crude oil stock change at 9:30 pm GMT
Australia Manufacturing & Services PMI at 10:00 pm GMT
Japan Trade Balance at 11:50 pm GMT
Australia New Home sales at 12:00 am GMT (Dec. 16)
Australia Leading Index at 12:30 am GMT (Dec. 16)
Japan Manufacturing & Services PMI at 12:30 am GMT (Dec. 16)

What to Watch: AUD/JPY

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

Yesterday, we pointed out breakout and pullback sets on AUD/JPY to watch out for based on the latest economic updates from Australia. A pop in volatility didn’t really pan out, but today, AUD/JPY continues to consolidate, and with economic leading indicators coming from both Australia and Japan (flash manufacturing & services PMI data), there could be another chance of a breakout soon.

If risk sentiment continues to lean positive (recently on vaccine / recovery optimism), then a positive read in business sentiment data from Australia (or even Japan) could lead to a more bullish sentiment on risk.

If that scenario plays out, a break above the falling wedge marked above is one to watch as it could draw in more buyers looking to play the trend higher and recovery optimism theme.

If the business sentiment disappoints, we could see a further pullback in AUD/JPY, but unless the overall global risk sentiment picture changes, this could lead to buying around yesterday’s potential support areas (around 77.50) if bullish reversal patterns emerge.

If we do all of a sudden see a brisk reversal in global risk sentiment towards negative, then traders may go bearish on AUD/JPY as it does tend to track overall global risk sentiment biases.