Daily Forex News and Watchlist: AUD/JPY

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This forex pair is hanging out at an area of interest while figuring out if risk-on flows are returning to the markets. Is a bounce due?

Before moving on, ICYMI, yesterday’s watchlist checked out EUR/USD hanging out at a mid-range area of interest. Be sure to check out if it’s still a good play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Tokyo core CPI slowed from 2.3% year-over-year to 2.1% in December as expected

Japanese household spending slumped 2.9% year-over-year in December vs. estimated 2.2% drop and earlier 2.5% decline

U.K. BRC retail sales monitor showed 1.9% year-over-year increase sales at same-store level vs. estimated 2.3% gain and earlier 2.6% increase

Australian retail sales jumped 2.0% month-over-month in November mostly due to Black Friday sales vs. estimated 1.2% gain, earlier figure downgraded to show 0.4% dip

Australian building approvals rose 1.6% month-over-month in November vs. estimated 1.9% decline and earlier 7.2% increase

Price Action News

Overlay of USD vs. Major Currencies Chart by TradingView

Overlay of USD vs. Major Currencies Chart by TradingView

The U.S. dollar was already on weak footing during Monday’s New York session, as equities managed to pull higher thanks to returning risk-on flows.

The dollar’s selloff was extended in the early Asian market hours, chalking up significant losses versus its low-yielding rivals like the Japanese yen and the franc.

There wasn’t much on the economic calendar apart from a couple of upside data points from Australia, so traders might simply be booking profits ahead of the U.S. CPI release later on or brushing off negative vibes from the beginning of the week.

Upcoming Potential Catalysts on the Economic Calendar:

SNB foreign currency reserves at 8:00 am GMT
U.S. NFIB Small Business index at 11:00 am GMT
U.S. trade balance at 1:30 pm GMT
Australian CPI y/y at 12:30 am GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action!  ️

AUD/JPY 15-min Forex Chart by TV

AUD/JPY 15-min Forex Chart by TradingView

Aussie pairs were off to a rough start this week since risk-off flows have been strongly in play.

But is it time for the tide to turn?

Asian session traders seem have been in the mood for more risk, as Chinese equity markets recovered from earlier declines, also following a bullish run from U.S. equities in the previous session.

If so, AUD/JPY could keep its head above S1 (96.49) near a minor psychological mark and bounce back up to bullish targets at the pivot point level (96.89) or even R1 (97.32) near the previous day highs.

An extension of risk-off flows, on the other hand, could spur a break below current levels and a test of the next support at S2 (96.06) near a major psychological mark.

There’s not much in the way of top-tier catalysts in the upcoming U.S. session, so Aussie traders might have to hold out for the release of Australia’s CPI later on.

Do you think we’ll see an upside surprise enough to boost RBA tightening forecasts?



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