Chart of the Day AUDJPY
AUD: The Australian Dollar has come under pressure on Tuesday, with the market selling the currency on the back of the more dovish read of the latest RBA Minutes. The RBA reiterated a willingness to cut interest rates further if needed and mentioned that "members noted that the board had the ability to provide further stimulus to the economy, if required".
JPY: Japan industrial production contracted in October: Japan industrial production slipped 4.5% MOM in October (Sep: +1.7%) leaving the annual contraction at 7.7% YOY (Sep: +1.3%) according to a final reading. The plunge in output was mainly a result of disruption at Japanese factories caused by typhoon in October.
Note, the AUDJPY is often seen as a risk barometer, with the US and China finally announcing a phase one trade deal that narrowly avoided the scheduled 15 Dec US tariffs hike on Chinese goods. The limited agreement, to be signed in early January involves China purchasing $200bn additional US goods and services over the next two years in exchange for a reduction of US tariffs on some Chinese goods, to be effective 30 days after the deal has been signed. Among other outcomes include China’s commitments to improve protection for intellectual property and a currency provision to not devalue the yuan to boost competitiveness. Market participants have turned somewhat cautious on the extent of this agreement and we have witnessed a buy the rumor sell the fact dynamic so far in the AUDJPY.
From a technical and trading perspective, AUDJPY has potentially carved out a double top below 76.00 this pattern is further supported by momentum and sentiment divergence, Fridays key reversal pattern looks set to be confirmed today with a close below the near term Volume Weighted Average Price, flipping the daily chart bearish, this will likely encourage further downside to test near term support at the 74.30 area, a breach here would be a bearish development and suggest extended downside looking for a test of bids towards 73.00
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!