AUD/JPY remains in a tight consolidation despite global growth concerns this week.
Will the pair’s intraweek support hold until the end of the week?
Before moving on, ICYMI, yesterday’s watchlist checked out USD/CAD’s consolidation ahead of BOC’s decision and another Powell testimony. 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:
In a speech at a World Trade Organization event, ECB President Lagarde vowed to do “whatever it takes” to restore price stability.
U.S. data releases supported a persistently tight labor market:
The JOLTS data reflected 1.9 job openings for every unemployed person in January, only marginally down from 2.0 jobs in December.
The ADP report showed private employment rising by 242K in February after an upwardly revised 119K increase in January.
Fed’s Beige Book said the labor market remained “solid” in February even if there were “scattered reports of layoffs” and while “finding workers with desired skills or experience remained challenging.”
BOC kept its rates unchanged at 4.50% as expected, its first pause in nine meetings.
In a second testimony in DC, Fed Chairman Powell pushed back against a 50bps March rate hike, saying that the Fed will wait for additional data.
U.S. crude oil stockpiles broke a 10-week streak of builds and fell by 1.7 million barrels last week over crude oil blending and under-reporting adjustment.
RICS: UK house price declines hit 14-year high but British property surveyors grew less gloomy in February.
China’s consumer prices up by 1.0% y/y in February, its slowest increase in a year. Meanwhile, producer prices fell by a sharper 1.4% y/y in February (from -0.8% in January) and marked a fifth consecutive month of price declines.
Japan’s annualized GDP revised lower from 0.6% to 0.1% in Q4, with domestic demand shrinking more than initially estimated.
Japan’s machine tool orders declined by 9.7% y/y in January after a 0.9% uptick in December as both domestic and foreign demand were hit by rising cost pressures.
Major U.S. crypto bank Silvergate Capital announced it will wind down operations and going into voluntary liquidation “in light of industry and regulatory developments.”
Netherlands – a major player in the chipmaking industry – plans to make new export restrictions of semiconductor tech to China.
Ukraine’s military said Russia fired 81 missiles at cities across the country, marking the biggest Russian missile attack since January.
Price Action News
The safe-haven yen was on its way to recover some of its intraweek losses when a second testimony from Powell reinforced the Fed Chairman’s “higher for longer” narrative. The prospect of higher interest rates and increased chances of a hard landing in the U.S. pushed JPY higher against USD and its higher-yielding counterparts.
But JPY also topped during the event, likely due to Powell reassuring the markets that a 50bps March rate hike was not a done deal just yet.
Asian and European session traders eventually picked up the JPY upswing on concerns of a hard landing in the U.S. and softer-than-expected Chinese and global growth trends.
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.S. Challenger job cuts at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
FOMC member Michael Barr to give a speech at 3:00 pm GMT
BusinessNZ manufacturing index at 9:30 pm GMT
NZ quarterly manufacturing sales at 9:45 pm GMT
Japan’s household spending at 11:00 pm GMT
Japan’s PPI at 11:00 pm GMT
BOJ’s policy decision out during the Asian session (Mar 10)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
Technical Chart of the Day: AUD/JPY
Risk aversion may have weighed on AUD/JPY this week but it looks like there are enough buyers at the 90.00 psychological level to prevent further losses…for now.
AUD/JPY was on its way to retesting its daily open prices when weaker-than-expected Chinese inflation data weighed on risk appetite.
The pair is now holding the 90.00 psychological level that (a) marks half of AUD/JPY’s daily ATR, (b) the Standard Pivot Point‘s S1 level, and (c) held as support at least twice this week.
Will the 90.00 handle hold in the next trading sessions? Or will risk aversion drag AUD/JPY to new intraweek lows?
A continuation of a risk-averse market theme could drag AUD/JPY below its intraweek support. A clear break below the S1 zone could drag AUD/JPY to the 89.80 previous area of interest.
But if traders adopt a wait-and-see stance ahead of the BOJ’s decision and U.S. NFP reports, or if we see an end-of-week profit-taking scenario, then AUD/JPY might find enough buyers to hold 90.00 and push the pair to the 90.50 or 91.00 previous inflection points.
