September 22, 2021

Daily Asia-London Sessions Watchlist: AUD/JPY

 The recent volatility and momentum may continue in AUD/JPY with the latest Bank of Japan statement on the way.

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at the downtrend in AUD/USD as risk sentiment sours, 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: 15348.53 +1.43%

FTSE: 6980.98 +1.12%

S&P 500: 4354.15 -0.08%

NASDAQ: 14746.40 +0.22% US 10-YR: 1.323% +0.014

Bund 10-YR: -0.317% +0.011

UK 10-YR: 0.803% -0.005

JPN 10-YR: 0.036% -0.008 Oil: 70.51 +0.31%

Gold: 1,775.30 +0.65%

Bitcoin: $42,188.85 -3.85%

Ethereum: $2,904.30 -5.51%

Fresh Market Headlines & Economic Data:

Wall St edges up day after sell-off but caution remains

Gold rises as Evergrande fears persist, market on standby for Fed

Labor, building material shortages depress U.S. single-family housing starts

UK public sector borrowing sees second highest August on record

Canada new house prices rise 0.7% in August

Australia’s central bank wary in case Delta slows recovery

Australia PM Morrison says trade talks with EU will take time

New Zealand consumer confidence dips in Q3

RBNZ’s Hawkesby quashes bets on aggressive rate hike in October

Upcoming Potential Catalysts on the Economic Calendar

API Crude Oil Stock Change at 8:30 pm GMT

Australia Leading Index at 1:00 am GMT (Sept. 22)

RBA Bullock speech at 2:00 am GMT (Sept. 22)

Bank of Japan Interest Rate Decision at 3:00 am GMT (Sept. 22)

Bundesbank Wuermeling speech at 7:30 am GMT (Sept. 22)

Italy Industrial Sales at 9:00 am GMT (Sept. 22)

Euro Area Consumer Confidence at 2:00 pm GMT (Sept. 22)

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: AUD/JPY

On the one hour downtrend of AUD/JPY above, we can see a very clear down trending market in the works. The recent shift in risk sentiment towards aversion has greatly supported the Japanese yen, the usual benefactor when traders want to lighten up on risk.

Coming soon, we’ve got potential catalysts from both Australia and Japan, most notably the latest monetary policy statement from the Bank of Japan. Expectations for that event are that the BOJ is likely to hold off on any moves, especially with a ruling party vote next week to determine the next Prime Minister of Japan.

And it’s likely that with the pandemic continuing strong enough to keep many parts of Japan in a state of emergency, as well as a hinderance to supply chains and trade, the rhetoric on future  growth will remain dovish.

Oddly enough, bearish sentiment may continue to support the “safe haven” yen, and if it indeed does push AUD/JPY lower, we’ll be on the watch for a sustained break of the previous swing lows / 79.00 major psychological handle to potentially take a short-term position.

Also, if the market does rebound to the a falling trendline area / previous swing high around 79.75, we’ll be on the lookout for bearish reversal patterns to play a potential setup with a higher probability of success as technical traders may hop back in short, and if overall risk sentiment stays negative.