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We’ve got plenty of potential economic catalysts ahead from Japan and Australia, making the pop higher in AUD/JPY one to watch for the session!

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on USD/JPY ahead of U.S. economic updates, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 13614.30 -1.85%
FTSE: 6558.91 -1.43%
S&P 500: 3799.78 -1.29%
NASDAQ: 13487.28 -1.02%
US 10-YR: 1.016% -0.024
Bund 10-YR: -0.552% -0.019
UK 10-YR: 0.263% -0.002
JPN 10-YR: 0.039% +0.01
Oil: 52.49 -0.23%
Gold: 1,845.20 -0.30%
Bitcoin: 39,896.75 -7.59%
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Fresh Market Headlines & Economic Data:

Dow jumps 400 points, rebounding from its biggest drop since October

U.S. economy closes out 2020 with lower than expected 4% gain

Jobless claims rise less than expected at 847,000 first-time applicants

U.S. New Home sales rose in December for the first time since July

U.S. goods-trade gap narrows as exports climb to pre-virus level

Oil steadies as COVID-19-induced demand worries persist

German Inflation rate expected to be +1.0% in January 2021

The number of employed in Spain increased by 167,400 people in the fourth quarter of 2020 compared to the previous quarter (0.87%) and stood at 19,344,300.

ECB Ready to Use All Tools Needed to Lift Inflation, Rehn Says

Euro area confidence slips amid longer curbs, vaccine trouble

Almost 20% of U.K. workforce furloughed as third lockdown got under way

Upcoming Potential Catalysts on the Economic Calendar

Japan Unemployment Rate, Tokyo CPI at 11:30 pm GMT
Japan Industrial Production, BOJ Summary of Opinions at 11:50 pm GMT
Australia PPI, private sector credit at 12:30 am GMT (Jan. 29)
Japan Consumer confidence at 5:00 am GMT (Jan. 29)

What to Watch: AUD/JPY

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

On the one hour chart of AUD/JPY above, we can see a pop higher  in the pair at the start of the U.S. trading session. There doesn’t seem to be a catalyst for the dramatic intraday turn, which means it was likely a profit taking / technical rebound from yesterday’s extreme risk-off moves.

That’s bringing the pair back to a minor resistance pattern of lower ‘highs’ and previous resistance area around 80.30. Will the bears hop in once again if retested?

Well, we’ve got potential catalysts for AUD/JPY’s next move coming from Japan and Australia, with the most notable likely being Australia’s PPI number. If we see that disappoint, as well as disappointing economic updates from Japan, broad risk sentiment may take over once again.

That increases the odds that the 80.30 previous resistance area may hold and that we should be on the lookout for bearish reversal patterns there.

Of course, if risk sentiment stays strongly positive into the Asia session and Australian PPI data comes in better-than-expected, there’s a chance that the current move may be able to break the falling ‘highs’ pattern.

In the case that the pair falls before the end of the U.S. session, watch out for support and bullish reversal patterns  79.50 handle for a potential bounce if the bullish economic / sentiment scenario plays out.