audjpy in for rollercoaster ride as focus turns to aussie cpi rba and boj 2680062016

The Australian dollar has been fairly stable recently, and it has actually risen against weaker rivals such as the New Zealand dollar and Japanese yen. However, that could all change if investors start to dislike risk, if, for example, U.S. elections or disappointing corporate earnings cause global equities to retreat. There is also a risk that tonight’s CPI inflation figures from Australia will disappoint expectations, while the Reserve Bank of Australia may surprise the market with a dovish policy statement next week. Among the most interesting Aussie pairs to watch is the AUD/JPY, for there is also some key Japanese data to consider at the end of this week, ahead of the Bank of Japan’s policy meeting next week.

But the immediate focus will be on Aussie CPI, which will be released in the early hours of Wednesday. Headline Aussie CPI is expected to have risen by 0.5% quarter-over-quarter in Q3, with the so-called “trimmed mean” version – which excludes the price changes of the volatile 30% of goods and services purchased by consumers – likely to have increased by 0.5%. Any noticeable deviation from these figures may cause a sharp move in the Aussie overnight.

Ahead of all the above-mentioned fundamental events, the AUD/JPY has reached a key juncture today: 0.80. Around this psychologically-important level, we have several other technical factors also converging, above all the 200-day moving average. This particular moving average has offered strong resistance in the past and is still pointing lower. There is also a bearish trend line to consider which has been in place for almost a year now. What’s more, this 0.80 area had been previously resistance, too. So, there are lots of reasons why the AUD/JPY could retreat from this level. If so, the bears would then like to see the breakdown of some key supports, starting with 78.85.

But the bulls would argue that the recent trend has been bullish, as highlighted for example by AUD/JPY making higher highs and higher lows on smaller time frames. In addition, the 50-day moving average has started to point higher and price is holding above it currently. A convincing break above the 0.8000-35 resistance area is what is required for this group of market participants to become more vocal. If seen, we could then see the start of a more significant rally towards the Fibonacci levels shown on the chart.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.