RBA’s decision weighed on the Aussie earlier today!
Should you use the opportunity to jump on AUD/JPY’s uptrend?
Before moving on, ICYMI, yesterday’s watchlist checked out a trend pullback opportunity for AUD/CAD ahead of RBA’s policy decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Canada’s manufacturing sector slipped from 52.4 to a contractionary reading of 48.6 in March over higher prices and lower production and new orders.
A drop in new orders dragged the U.S. ISM manufacturing PMI from 47.7 to 46.3 in March. This is the fifth consecutive monthly contraction for the report, and its lowest level since May 2020.
A BOC survey reflected that interest rate and recession concerns have resulted in subdued sales and capital expenditure plans from businesses.
NZIER’s quarterly business survey showed sales (demand) staking over as primary concern over labor in Q1 2023.
Asian Development Bank (ADB) revised its forecasts for China’s growth from 4.3% to 5.0% for 2023, saying that its post-COVID reopening will “create the strongest kind of support for growth in the region this year.”
As expected, the RBA held its interest rates steady at 3.6% to give the central bank “more time to assess the state of the economy…in an environment of considerable uncertainty.” This marks the first pause since the rate hike cycle started in April 2022.
Germany’s trade surplus steadied at around 16 billion EUR in February, with exports growing by 4% m/m – its fastest pace in ten months – and imports accelerating to a three-month high of 4.6%.
Price Action News
Expectations of higher interest rates from major central banks like the Reserve Bank of Australia (RBA) and a weak U.S. PMI report weighing on USD helped boost the Aussie against its major counterparts.
The Australian dollar was more subdued during early Asian session trading though, as it stayed mostly within its U.S. session ranges ahead of RBA’s policy decision.
The RBA did end up pausing its interest rate hikes though the central bank is still open to further tightening if needed.
Whether it’s a buy-the-rumor, sell-the-news or traders pricing in RBA’s less hawkish biases compared to other central banks, AUD broke below its intraday ranges and is on its way to erasing a chunk of its Monday gains.
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone’s PPI reports at 9:00 am GMT
Canada’s building permits at 12:30 pm GMT
U.S. JOLTS job openings at 2:00 pm GMT
U.S. factory orders at 2:00 pm GMT
RBNZ’s policy decision at 2:00 am GMT (Apr 5)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
AUD/JPY: 15-min
Expectations of hawkish central banks after OPEC’s announcement helped extend AUD/JPY’s uptrend earlier this week.
In fact, the pair hit a high at 90.15 before the sellers stepped in!
And stepped in they have. The RBA is one of the first among its peers to pause a tightening cycle, which makes other high-yielding bets more attractive…for now.
Meanwhile, a bit of caution and concerns over global growth after the U.S. printed a disappointing PMI report did not help overall risk-taking in the markets.
AUD/JPY is now trading closer to 89.60, which lines up with March’s highs and today’s 38.2% Fibonacci retracement.
Not only that, but the current price also lines up with the Standard Pivot Point after getting rejected at 1/4 of its full daily ATR.
Are we looking at a chance to jump on AUD/JPY’s uptrend?
Continued risk-taking could push AUD/JPY back to its weekly highs.
But if global growth concerns and interest rate differentials play bigger parts in AUD’s catalysts, then AUD/JPY could revisit lower inflection points like 89.30 or 89.00.
