The trading calendar may not be busy in the next couple of hours, but I’m sure forex traders will be!
Today, I’m looking at the possibility of AUD/JPY extending its short-term trend.
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- China PBOC lowers banks’ reserve requirements to encourage lending
- ECB’s Lagarde sees policy change in July, possible 2022 measures
- Japan’s May machinery orders rise 7.8%, up for third month in a row
- Japan wholesale prices continue to surge as import costs hit record
- Australian dollar falls as COVID-19 lockdown in Sydney extended
- Asia shares bounce as mood shifts, sentiment fickle
Upcoming Potential Catalysts on the Economic Calendar:
- FOMC’s John Williams to give a speech at 1:30 pm GMT
- U.S. consumer inflation expectations at 3:00 pm GMT
- U.K.’s BRC retail sales monitor at 11:01 pm GMT
What to Watch: AUD/JPY
The Aussie got a reprieve against the yen on Friday after losing pips for most of last week. Thing is, the upswing didn’t have a lot of support behind it beyond end-of-week profit-taking.
The bears also have more meat to chew on today as Sydney records its biggest rise in COVID-19 this year despite being on its third week of lockdown. Markets believe that the rising cases would likely lead to prolonged lockdowns. Yikes.Meanwhile, AUD/JPY is having trouble making highs above the 1-hour’s 100 SMA as well as the 38.2% Fib of last week’s downswing.
With not a lot of reports scheduled during the U.S. session, traders could focus on the downside risks of more lockdowns across the globe and the data misses that we saw last week. The demand for safe-haven could drag AUD/JPY back to its July lows.
If Friday’s risk-taking extends to today’s trading sessions, however, then AUD/JPY could trade above the SMAs to retest the trend line support that’s been around since mid-June.
But all that’s for the next trading sessions. For now, MarketMilk is pointing to a short-term bearish run for AUD/JPY on the 1-hour time frame: