AUD/JPY is currently in consolidation mode to start the week, but could the action pick up with central bank events ahead for both the Aussie and the yen?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at an opportunity forming on EUR/AUD as it trends lower, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 14569.39 +0.20% FTSE: 6736.96 +0.17% S&P 500: 3939.34 +1.04% NASDAQ: 13398.67 +2.52% |
US 10-YR: 1.54% +0.02 Bund 10-YR: -0.333% -0.001 UK 10-YR: 0.734% -0.002 JPN 10-YR: 0.11% -0.01 |
Oil: 65.98 +2.39% Gold: 1,720.50 -0.07% Bitcoin: 57,795.25 +3.45% Ethereum: 1,846.88 +2.42% |
Fresh Market Headlines & Economic Data:
German Wholesale prices in February 2021: +2.3% on February 2020
Bank of England governor Andrew Bailey: I’m confident about UK’s post-Covid future
Canadian housing starts decline 13.5% on month in February: CMHC
Sweden inflation unexpectedly slows in blow to Riksbank forecast
Upcoming Potential Catalysts on the Economic Calendar
RBA Meeting Minutes at 12:30 am GMT (Mar. 16)
Australia House Price Index at 12:30 am GMT (Mar. 16)
Bank of Japan Kuroda speech at 4:05 am GMT (Mar. 16)
Japan Industrial Production at 4:30 am GMT (Mar. 16)
France Inflation Rate at 7:45 am GMT (Mar. 16)
Italy Inflation Rate at 9:00 am GMT (Mar. 16)
ZEW Economic Sentiment at 10:00 am GMT (Mar. 16)
What to Watch: AUD/JPY
With not a lot of scheduled top tier catalysts ahead, it’s likely FX volatility will be relatively quiet, at least until the FOMC statement on Wednesday or we get a surprise news event shaking up global risk sentiment.
So, technical setups may be the way to play for now, and AUD/JPY near tops the watchlist since it does have mid-tier events ahead; most notably the RBA’s latest meeting minutes and a speech from BOJ Governor Kuroda during the Asia session.
These aren’t usually market moving events, but given that they are central bank focused, they do have the potential to get the markets moving IF there is a surprise.
And even if we don’t get something fresh from those events, the AUD/JPY has potential to ride higher in its current trend as broad risk sentiment continues to price in a vaccine induced pandemic recovery, as well as stimulus effects ahead from the latest U.S. government action.
So with that in mind, we’re looking for either a pullback lower in AUD/JPY to the minor support area around 84.20 that’s held over the past week. If the market gets there and gives us bullish support patterns on the session, that could draw in short-term technical traders to potentially buy. If broad risk sentiment stays positive, then this could easily jump back into the uptrend, especially Aussie house price data or RBA minutes spark a bullish reaction.
We can also see minor resistance around the 84.70 handle, creating a range play well worth watching for an upside breakout. If we do see a move above 84.70 with a bullish catalyst, then we’re likely to see short-term momentum players potentially jump in for quick pips to the upside, and/or longer-term players looking to add to their positions.
