November 2, 2021

Daily Asia-London Sessions Watchlist: AUD/JPY

 We’ve got AUD/JPY on deck in anticipation that the upcoming RBA will spark a directional move on the Aussie.

Will they give off a hawkish tone in their upcoming statement?

Intermarket Update:

Equity Markets Bond Yields Commodities & Crypto

DAX: 15806.29 +0.75%

FTSE: 7288.62 +0.71%

S&P 500: 4613.67 +0.18%

NASDAQ: 15595.92 +0.63% US 10-YR: 1.563% +0.007

Bund 10-YR: -0.107% -0.005

UK 10-YR: 1.039% -0.01

JPN 10-YR: 0.094% -0.01 Oil: 83.97 +0.48%

Gold: 1,794.90 +0.62%

Bitcoin: $61,211.00 +0.78%

Ether: $4,360.29 +2.58%

BNB: $545.73 +4.74%

Fresh Market Headlines and Economic Data:

ISM Manufacturing PMI in October: 60.8 vs. 61.1 in Sept.

Yellen says U.S economy is not overheating

U.S. Treasury plans to borrow $1.015T in the fourth quarter, more than the August estimate of $703B

Canada manufacturing PMI in Oct: 57.7 vs. 57.0 in Sept – Markit

German Retail turnover for Sept. 2021: -2.5% m/m (real terms)

U.K. Manufacturing PMI in Oct: 57.8 vs. 57.1 in Sept. Purchasing Managers’ Index (PMI): 65.4 in Oct. vs. 68.1 in Sept.

ANZ job advertisement series rose 6.2% in October

au Jibun Bank Japan Manufacturing PMI in October: 53.2 vs. 51.5 in Sept.

Stablecoin risk spurs U.S. agencies to seek power to crack down

Upcoming Potential Catalysts on the Economic Calendar

New Zealand Building Consents at 11:50 pm GMT

Bank of Japan Monetary Policy Meeting Minutes at 11:50 pm GMT

Reserve Bank of Australia Interest Rate Decision at 3:30 am GMT (Nov. 2)

RBA Debelle speech at 5:50 am GMT (Nov. 2)

Swiss CPI, Retail Sales at 7:30 am GMT (Nov. 2)

France Manufacturing PMI at 8:50 am GMT (Nov. 2)

Germany Manufacturing PMI at 8:55 am GMT (Nov. 2)

Euro area at Manufacturing PMI at 9:00 am GMT (Nov. 2)

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

We’ve got pretty simple short-term setup to start off the new month, and that’s a potential news play setup on AUD/JPY.

Coming soon at 3:30 am GMT, the Reserve Bank of Australia will give their latest monetary policy statement, with expectations of no policy changes at this meeting. Instead, traders will be watching for hints that the RBA may step up the timing of their first interest rate hike, currently speculated to be in 2024.

This event is likely to spark big volatility for the Australian dollar, a scenario that may be best played with a news trading/straddle setup. In this setup, traders generally look for consolidating markets where a spike in volatility is expected due to an impending catalyst.

And AUD/JPY fits the bill as the market has been consolidating over the past few weeks, forming an ascending triangle with resistance holding at the 86.00 major psychological level.

When price breaks this consolidation pattern, some traders may try to jump in the direction of the move to try to catch a momentum directional move, both short-term and long-term depending the results of the catalyst.

And in this scenario, it’s possible that we could see an upside break of the 86.00 if the RBA gives off hints of an earlier rate hike, a scenario technical traders may jump on given the longer-term uptrend higher and the ascending triangle pattern.

Keep in mind though that these events may be liquidity events for traders who have ridden the longer-term trend, meaning that they may take profits after already riding up the market in anticipation of the catalyst.

If so, that could lead to a downside break on AUD/JPY, but it may be short-lived unless the RBA does give off vibes that a hike is still expected to come in 2024 or beyond.