The RBA just hiked interest rates by 0.50% as expected, but Aussie bulls don’t seem to be impressed.
Can this mean a turn lower for AUD/JPY?
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/CAD’s bearish pullback ahead of the RBA decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. President Biden expected to roll back some Chinese tariffs this week
U.S. Treasury Yellen and Chinese Vice Premier Liu He to maintain open communication
ANZ reports 0.4% dip in New Zealand commodity prices
Australian retail sales rose by another 0.9% in May as expected
Chinese Caixin services PMI improved from 41.4 to 54.5 vs. 49.7 forecast
RBA hiked interest rates by 0.50% to 1.35% as expected
RBA to maintain “data-dependent” as inflation likely to peak this year then decline
Singapore’s central bank mulling more restrictions on crypto trading
French industrial production stayed unchanged in May vs. projected 0.1% uptick
Upcoming Potential Catalysts on the Forex Economic Calendar:
BOE Financial Stability report and FPC statement at 9:30 am GMT
BOE Governor Bailey’s speech at 10:00 am GMT
U.S. factory orders at 2:00 pm GMT
New Zealand GDT dairy auction coming up
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: AUD/JPY
U.S. traders are back from their Fourth of July festivities today!
Even though there’s not much in the way of top-tier economic events just yet, investors might be eager to price in their expectations ahead of more fireworks later in the week.
I’m referring of course to the FOMC decision and NFP release that might inspire another round of risk-off flows. Can these spill over to a rally for the safe-haven yen?
A short opportunity seems to be shaping up quite nicely for AUD/JPY, as the pair is stalling around a broken trend line. This is close to the 61.8% Fibonacci retracement level on the breakdown, so sellers might be jumping in right here.
After all, the Aussie barely rallied even after the RBA hiked rates by 0.50% earlier today. That’s probably because policymakers shared a lot of concerns about how higher borrowing costs and inflation are hurting household spending.
Stochastic is confirming a potential bearish move, as the oscillator already turned lower from the overbought zone. At the same time, the 100 SMA is below the 200 SMA to reflect the presence of bearish vibes.
If resistance keeps holding and risk aversion returns, AUD/JPY could slump back to the lows at 91.37 or lower.
Better keep close tabs on the headlines, fellas!
