Australia

The combination of a deteriorating macroeconomic backdrop, the first monetary policy decision from a new RBA governor and threat of market intervention from the Bank of Japan has created an interesting mix for the AUD/JPY.

The ASX 200 has continued to show resilience around the key 7,000 support level, despite the surge on bond yields, negative sentiment and rising inflation. What if sentiment improves?

In an environment of heightened risk aversion, sluggish global economic growth and continued grind higher in rates, a volatile monthly inflation indicator from Australia doesn’t scream as overly important.

An uneventful year for the ASX 200 could be about to get a lot more exciting with the index perilously close to breaking long-run uptrend support dating back to the start of the coronavirus pandemic.

Australia’s August labour force survey had something for both AUD/USD bulls and bears, but in the end the detail does not meaningfully change the outlook for interest rates.

AUD/USD downside has slowed despite a lot of negativity, bolstering the case for a near-term bounce ahead of key risk events later this week.

Bearish technical signals are mounting for Australian equities, pointing to the potential for additional downside beyond that already seen.

With the RBA on the sidelines, it means external factors will continue to drive movements in the AUD, ASX 200 and Australian bond futures for the foreseeable future.

Unemployment jumps unexpectedly diminishing the risk of a wage price spiral forming.

No matter how you slice or dice it, negatives for the AUD/USD continue to pile up.

USD/JPY is back to levels where the BOJ intervened last year but that doesn't mean it will do so again.

USD/JPY formed a bearish engulfing candle yesterday to suggest all is not well around the cycle highs. Beyond that, it is likely down to NFP as to where USD/JPY finishes the week. We also look at a potential bullish setup on the China A50 which is 'turned the bearish ship around' since we noted its failure to break beneath 12,400 (despite negative sentiment).

AUD/USD fell to an 8-week low, US indices are on track for bearish engulfing weeks and even gold closed the day lower during a risk-off session. The question in my mind as we approach the weekend is whether we’re witnessing a knee-jerk reaction to the US credit-trading downgrade and are at risk of prior trends returning, or whether it is the beginning of something more sinister.

The RBA held their interest rate at 4.1% for a second consecutive month. And the fact AUD fell over -0.6% and the ASX touched a high of the week shows that not everyone was positioned for the outcome.

Whilst Aussie employment data raised expectations of another RBA hike, today’s soft CPI figures may get the RBA off the hook from those opposing higher rates. AUD/USD fell accordingly.

The Australian dollar has spiked higher across the board after the economy delivered another rate-hike defying report. And that has seen AUD/JPY and AUD/JPY break out of their recent consolidations to the upside.

The RBA will be keeping a close eye on today's employment figures from Australia. If they continue to outperform then it keeps some pressure on the RBA to at least strike a hawkish tone at their next meeting, or potentially hike if next week's inflation figures are too hot. And that places AUD pairs in focus, and today we're looking at a potential long setup on AUD/JPY at the lower end of its trading range.