USD/JPY, ASX 200 Analysis: Asian Open – 27th June 2023

Market summary

Whilst Germany’s Ifo business sentiment report showed a slight improvement, the expectations index fell to a 6-month low
Growth stocks led Wall Street lower on Monday, with the Nasdaq 100 forming its daily high just below 15k and closing at the low of the day
The S&P 500 also closed at the low of the day, but may find support around the August 2022 high around 4325.
The Dow Jones formed a daily doji just above 33,600 – so perhaps swing lows are close to forming for indices this week
Forex formed inside days during a low news, low volatility day
USD/JPY held just beneath Friday’s 7-month high despite a warning shot from Japan’s MOF that they are ‘watching FX volatility’
USD/CAD is holding just above Friday’s 9-month low ahead of a key inflation report from Canada tonight, where a strong print could send USD/CAD to new lows on BOC hiking bets (or send USD/CAD higher if CPI comes in weak)
AUD/CAD closed to a 7-month low ahead of Canada’s inflation, AUD/NZD fell for a fifth day to a 17-day low, although potential support around 1.0800 is nearby
A Reuter poll favours the BOE are to hike rates by 25bp at the next two meetings and take rates to 5.5%
A separate poll shows economists expect the MOF to try and halt the yen rally at 145 – right around the top of the liquidity gap we warned about last week
Economists also expect the BOC to hike once more by 25bp to a terminal rate of 5%

Read the weekly COT report for an overview of large speculator positioning across forex, commodities and indices

Events in focus (AEDT):

15:00 – BOJ inflation report
22:30 – Canada’s inflation report is the main event
We also have a few central bankers speaking tonight from the BOE, ECB and BOC (see calendar) ahead of Canada’s CPI

ASX 200 at a glance:

Fourth day lower for the ASX 200
Yesterday was the smallest of the four days
Volume has been below the 20-day average over the 4-day selloff (not exactly the signs of an epic bear move)
RSI (2) is oversold to warn of a near-term inflection point
Implied volatility has also shot higher, which can also be a sign an inflection point is near
With 7,000 not far below, a swing low could be close (if not already seen)

USD/JPY 30-minute chart:

USD/JPY support was found around 143 yesterday before its burst higher was accompanied with rising volumes. Prices are now consolidating within a potential triangle, and opened above the daily pivot point. The daily R1 and R2 pivots are near the cycle high and upper 1-day volatility band which make them viable targets, for bulls to consider (and bears to consider shorting around). A break lower brings the lows around 143 into focus near the daily S1 pivot. Keep an ear out for any comments from the MOF who may try to jawbone the yen.

Asia Data Calendar (AEDT):

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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