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Yen pairs were once again the star of an otherwise dull forex show, as BOJ head Ueda’s remarks sparked strong moves.
Is AUD/JPY in for a breakdown soon?
Before moving on, ICYMI, Friday’s watchlist checked out CHF/JPY’s longer-term resistance test. 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:
U.S. Richmond manufacturing index sank from -5 to -11 vs. estimated improvement to -4 in December, as shipments, new orders, and employment eased
Japanese preliminary industrial production fell by 0.9% m/m in November vs. projected 1.7% slump, following earlier upgraded 1.3% increase
Japanese retail sales rose 5.3% y/y from earlier 4.1% gain vs. estimated 5.1% increase
BOJ head Ueda noted that the possibility of lifting interest rates from negative territory next year is “not zero” but still waiting on stronger signs of wage inflation
Price Action News
Overlay of JPY vs. Major Currencies Chart by TradingView
Yen pairs had a mixed run in the earlier U.S. trading session but managed to pull higher as the Asian markets, thanks to upbeat developments from Japan.
Not only did both industrial production and retail sales figures beat estimates, but BOJ head Ueda also hinted that there might be a chance the central bank lifts interest rates out of the negative territory next year.
Of course he was quick to add that they are still waiting on stronger wage inflation trends, as they’d like to assess the extent that firms pass on the costs to consumers.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. initial jobless claims at 1:30 pm GMT
U.S. goods trade balance at 1:30 pm GMT
U.S. pending home sales at 3:00 pm 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
After a quick pop higher earlier on, AUD/JPY is back in selloff mode as hopes for a BOJ hike sometime late next year were revived.
The pair is closing in on S2 (96.50) near a support zone that’s held in the past few days and a minor psychological mark. If buyers hop in at this area, the pair could recover to S1 (96.80) or higher.
Stronger bullish momentum might even spur a rally to the highs at R1 (97.50) or at least until the pivot point level (97.20).
A break below the floor, on the other hand, could be followed by a move to S3 (96.10) near the 96.00 major psychological mark.
There are no other major reports lined up from Japan or Australia, so make sure you keep tabs on headlines that might impact overall market sentiment when trading this. Good luck and good trading!
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