The Australian manufacturing sector slumped into a recession as confirmed by two PMI reports released during the Asian trading session. Building approvals plunged and company profits for the third quarter decreased. The AUDJPY pushed higher, but global trade uncertainty continues to be elevated. How much farther can bulls push this currency pair higher before bears step in? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Japanese company profits for the third quarter dropped, but forex traders focused on better-than-expected capital spending excluding software. The Japanese Yen, a safe-have currency, came under mild selling pressure following better-than-expected manufacturing data out of China. Will bears force the AUDJPY into a retreat or can bulls keep the advance alive? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here are the key factors to keep in mind today for Australian Dollar trades:
- Australian AiG Performance of Manufacturing Index: The Australian AiG Performance of Manufacturing Index for November was reported at 48.1. Forex traders can compare this to the Australian AiG Performance of Manufacturing Index for October which was reported at 51.6.
- Australian CBA Manufacturing PMI: The Final Australian CBA Manufacturing PMI for November was reported at 49.9. Economists predicted a figure of 49.9. Forex traders can compare this to the previous Australian CBA Manufacturing PMI for November which was reported at 49.9.
- Australian CoreLogic House Prices: Australian CoreLogic House Prices for November increased by 2.0% monthly. Forex traders can compare this to Australian CoreLogic House Prices for October which increased by 1.4% monthly.
- Australian TD Securities Inflation: Australian TD Securities Inflation for November was reported flat at 0.0% monthly and increased by 1.5% annualized. Forex traders can compare this to Australian TD Securities Inflation for October which increased by 0.1% monthly and by 1.5% annualized.
- Australian ANZ Job Advertisements: Australian ANZ Job Advertisements for November decreased by 1.7% monthly. Economists predicted a decrease of 2.2%. Forex traders can compare this to Australian ANZ Job Advertisements for October which decreased by 1.0% monthly.
- Australian Building Approvals: Australian Building Approvals for October decreased by 8.1% monthly and by 23.6% annualized. Economists predicted a decrease of 1.0% monthly and 18.0% annualized. Forex traders can compare this to Australian Building Approvals for September which increased by 7.2% monthly and which decreased by 17.0% annualized.
- Australian Inventories and Company Operating Profits: Australian Inventories for the third quarter decreased by 0.4% quarterly and Australian Company Operating Profits decreased by 0.8% quarterly. Economists predicted a decrease of 0.2% and an increase of 2.0%. Forex traders can compare this to Australian Inventories for the second quarter which decreased by 0.9% quarterly and to Australian Company Operating Profits which increased by 4.5% quarterly. Company Pre-Tax Profits for the third quarter decreased by 0.7% quarterly. Forex traders can compare this to Company Pre-Tax Profits for the second quarter which decreased by 0.3% quarterly.
- Chinese Caixin Manufacturing PMI: The Chinese Caixin Manufacturing PMI for November was reported at 51.8. Economists predicted a figure of 51.4. Forex traders can compare this to the Chinese Caixin Manufacturing PMI for October which was reported at 51.7.
- Australian RBA Commodity Index: The Australian RBA Commodity Index for November decreased by 5.0% annualized. Forex traders can compare this to the Australian RBA Commodity Index for October which decreased by 1.0% annualized.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Loans & Discounts: Japanese Loans & Discounts for October increased by 2.24% annualized. Forex traders can compare this to Japanese Loans & Discounts for September which increased by 1.90%.
- Japanese Company Profits and Japanese Company Sales: Japanese Company Profits for the third quarter decreased by 5.3% annualized and Japanese Company Sales decreased by 2.6% annualized. Forex traders can compare this to Japanese Company Profits for the second quarter which decreased by 12.0% annualized and to Japanese Company Sales which increased by 0.4% annualized. Japanese Capital Spending for the third quarter increased by 7.1% annualized and Japanese Capital Spending excluding Software increased by 7.7% annualized. Forex traders can compare this to Japanese Capital Spending for the second quarter which increased by 1.9% annualized and to Japanese Capital Spending excluding Software which decreased by 1.7% annualized.
- Japanese Manufacturing PMI: The Final Japanese Manufacturing PMI for November was reported at 48.9. Forex traders can compare this to the previous Japanese Manufacturing PMI November which was reported at 48.6.
- Japanese Vehicle Sales: Japanese Vehicle Sales for November decreased by 14.6% annualized. Forex traders can compare this to Japanese Vehicle Sales for October which decreased by 26.4% annualized.
Should price action for the AUDJPY remain inside the or breakdown below the 73.900 to 74.400 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 74.250
- Take Profit Zone: 71.700 – 72.250
- Stop Loss Level: 74.700
Should price action for the AUDJPY breakout above 74.400 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 74.700
- Take Profit Zone: 75.650 – 76.150
- Stop Loss Level: 74.400
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