Monday, December 2, 2013

AUDJPY Forecast for 2nd December - 6th December 2013

The support level at 92.000 seems to be holding. This level was tested twice last week but managed to hold. 

I haven't opened a new position yet, but if today finishes with a bullish close without touching the 21 EMA, I'd be very interested.


News / Fundamentals


Last week's AUD news releases were mainly favourable. The RBA tried to talk down the Australian dollar, but the effect seem to have been shortlived. Quarter-to-quarter construction beat expectations, expanding at 2.7% versus a predicted 0.6%. Capex also came out above forecast, expanding 3.6% for the quarter as opposed to a predicted -1.1% decline. However, month-to-month private credit only expanded 0.3% versus a predicted 0.4%, but the difference is small. On the sum of this news, it looks like the AUD's fundamentals have strengthened. 


It's been a relatively quiet week for the JPY, with the news somewhat bearish. Annual household spending and industrial production numbers came out below forecast, and inflation is above expectation. 


Nothing noteworthy that I can see. 


USD news has been mixed. Tapering speculation continues, which should have a bearish effect on the JPY.

How it all fits together

AUD's fundamentals have strengthened in the face of the RBA talking the Australian dollar down. The RBA is making an interest rate announcement this week. While there is little expectation of a rate decrease, it's likely the RBA will use the opportunity to verbally bash the AUD's value. However, this will most likely be ignored in the face of good numbers, in my opinion. JPY's figures have disappointed the market. Fundamentals suggest bullish movement for the AUDJPY this week. 

News verdict: moderately bullish


According to last week's COT report, JPY shorts have increased to a 12-month high while AUD shorts have remained the same.



Sentiment verdict: moderately bullish

Technical Analysis

As illustrated, the AUDJPY seems to have re-bounced off support around 92.000-93.000. The ascending channel is holding. However, it isn't making new highs at the top of the channel.

It's also possible that the AUDJPY is also entering a horizontal range between 92.000 and 94.000. The 21 EMA suggests ranging action. 

Technical verdict: slightly bullish

Upcoming Events

This week should be volatile. The RBA is making an interest rate statement tomorrow (3rd December), plus retail sales, GDP and trade balance figures are coming out in the next few days. Friday is the usual USD Non-farm Payroll release. If the RBA talks the AUD down, I expect buyers to re-enter around 92.500. There are no major JPY news releases this week. 

Overall, fundamentals, technicals and sentiment suggest bullishness for the AUDJPY. I will like to see how today closes before I open a long. 

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