InstaForex

October 1, 2021

Daily U.S. Session Watchlist: AUD/JPY

 Evergrande woes are back in play and weighing on the higher-yielding Aussie.


Will risk-off flows persist the upcoming session?


Let’s review headlines that rocked the markets in the last trading sessions:


Fresh Market Headlines & Economic Data:

Evergrande misses $180 million interest payment, ASX to four-month low


Australia’s AIG manufacturing index down from 51.6 to 51.2


PM Morrison: Australia to reopen international borders by November 


Japanese unemployment rate steady at 2.8% vs. 2.9% forecast


Japan’s Tankan manufacturing index up from 14 to 18


Japan’s Tankan non-manufacturing index up from 1 to 2


Japanese consumer confidence index rose from 36.7 to 37.8


Japanese final manufacturing PMI upgraded from 51.2 to 51.5


U.S. President Biden signs stopgap bill to fund gov’t until Dec. 3


Asian stocks extend slide on inflation woes, Evergrande fears


Crude oil takes hits as OPEC mulls another production increase


German retail sales rose by 1.1% versus 1.6% estimate


Upcoming Potential Catalysts on the Economic Calendar:

Canadian monthly GDP at 12:30 pm GMT

U.S. core PCE price index at 12:30 pm GMT

U.S. ISM manufacturing PMI at 2:00 pm GMT

U.S. revised UoM consumer sentiment index at 2:00 pm GMT


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

Market watchers are feeling extra jittery again, as Chinese property developer Evergrande missed its $180 million interest payment to investors.


This is the second time in a week that the cash-strapped company has failed to meet its payment deadline, spooking traders into worrying that this could have financial repercussions worldwide.



With that, traders might flock back to safe-haven holdings like the U.S. dollar and the Japanese yen. At the same time, higher-yielding currencies like the Aussie might get dumped.

On the 1-hour chart of AUD/JPY, I’m seeing a head and shoulders reversal pattern, with price already testing the neckline support.


A break below this could set off a drop that’s the same height as the chart formation, which is a little over a hundred pips.


The 100 SMA is above the 200 SMA, but the pair has already broken below the latter as an early signal of bearish momentum. Just be careful when shorting since Stochastic is already dipping into the oversold region!