September 28, 2021

Daily Asia-London Sessions Watchlist: AUD/JPY

 Economic updates coming from both Australia and China may get the Aussie jumping in the upcoming Asia session, making this momentum move in AUD/JPY one to watch as it approaches a resistance area. Will it break or will sellers take control?

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at the downtrend bounce in AUD/NZD, 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: 15573.88 +0.27%

FTSE: 7063.40 +0.17%

S&P 500: 4443.11 -0.28%

NASDAQ: 14969.97 -0.52% US 10-YR: 1.485% +0.024

Bund 10-YR: -0.224% +0.00

UK 10-YR: 0.958% +0.001

JPN 10-YR: 0.052% -0.008 Oil: 75.52 +2.08%

Gold: 1,750.30 -0.08%

Bitcoin: $42,789.50 -1.09%

Ether: $2,962.80 -3.15%

Fresh Market Headlines & Economic Data:

Dow rises, tech shares drag down broader market as 10-year Treasury yield tops 1.5%

U.S. core capital goods orders, shipments rise strongly in August

Fed’s Evans sees taper close, expects rate hike in 2023

Fed’s Brainard says labor market may soon meet mark for taper

NY Fed’s Williams says tapering of asset purchases may soon be warranted

Atlanta Fed GDP Now: +3.2% vs. 3.7% previous

Bank of England reinforces option for rate hike this year

Long, cold winter ahead for Britain could keep gas prices soaring to record levels

Cryptocurrency exchanges scramble to drop Chinese users after Beijing’s ban

Pfizer begins study of oral drug for prevention of COVID-19

Upcoming Potential Catalysts on the Economic Calendar

Bank of Japan Meeting Minutes at 11:50 pm GMT

Australia Retail Sales at 1:30 am GMT (Sept. 28)

China Industrial Profits at 1:30 am GMT (Sept. 28)

BOJ Core CPI at 5:00 am GMT (Sept. 28)

Germany Consumer Confidence at 6:00 am GMT (Sept. 28)

France Consumer confidence at 6:45 am GMT (Sept. 28)

ECB President Lagarde speech at 12:00 pm GMT (Sept. 28)

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

After spending most of September in a solid downtrend, AUD/JPY quickly turned around last week and broke its pattern of falling ‘highs’, correlating with news of the PBOC providing liquidity to calm market fears stemming from the the Evergrande debt crisis story. That’s prompted not only a break above the trendline pattern shown on the one hour chart above, but also above the 80.00 major psychological handle to nearly retest the next resistance area around 81.00.

The question now is whether there’s enough momentum for 81.00 to fall to the bulls, or is this where the bulls take profit and the bears see another short opportunity? Well, we’ve got a couple of potential short-term catalysts ahead in the form of retail sales data from Australia and Chinese Industrial profits, which could have some influence on the Australian dollar’s short-term bias.

For the upcoming session, we’ll be watching those two events, and if they both come in better-than-expected, we could see more short-term Aussie bullishness, especially if broad risk sentiment leans positive. A break above the 81.00 handle may draw in short-term technical traders, and based on the daily ATR of around 75 pips, we could see a move up to 81.35 – 81.50 on the session before some selling starts creeping in.

Of course, if we see dips ahead of those events and they come out positive, then dip buyers are likely to show up. Any pullback to 80.50 – 80.00 is a move to watch for bullish reversal patterns to appear before considering a short-term or swing long position on AUD/JPY.

And vice versa, if the upcoming data from Australia and/or China disappoints, Aussie traders may look to take some profits/initiate a short-term short position. Bearish reversal patterns around 81.00 may draw in technical players that could take the pair back to 80.50 – 81.00 after the data release, again, based on the daily average true range.