Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Reserve Bank of Australia increased interest rates by 25 basis points to 4.35%. Economists predicted an increase of 25 basis points from 4.10%. Forex traders can compare this to the previous Reserve Bank of Australia interest rate decision, where it left interest rates unchanged at 4.10% for a fourth consecutive meeting. It may indicate that the central bank was unpleased with progress on inflation and could serve as a blueprint for other G7 central bankers, except Japan, to act before the end of 2023 to combat sticky inflation. While many economists believe a recession threat decreased, stagflation could manifest itself, and last throughout this decade.
The Chinese Trade Balance for October came in at $56.53B. Economists predicted a figure of $82.00B. Forex traders can compare this to the Chinese Trade Balance for September, reported at $77.71B. Exports for October plunged by 6.4% annualized, and Imports rose by 3.0% annualized. Economists predicted a drop of 3.3% and 4.8%. Forex traders can compare this to Exports for September, which contracted by 6.2% annualized, and Imports by 6.2% annualized.
Japanese Household Spending for September rose by 0.3% monthly and contracted by 2.8% annualized. Economists predicted a decrease of 0.4% and 2.7%. Forex traders can compare this to Japanese Household Spending for August, which surged by 3.9% monthly and decreased by 2.5% annualized.
Japanese Average Cash Earnings for September increased by 1.2% annualized and Japanese Overtime Pay by 0.7% annualized. Forex traders can compare this to Japanese Average Cash Earnings for August, which rose by 0.8% annualized, and Japanese Overtime Pay, which expanded by 0.2% annualized. The Overall Wage Income for Employees for September rose by 1.2% annualized. Forex traders can compare this to the Overall Wage Income for Employees for August, which increased by 0.8% annualized.
The forecast for the AUD/JPY is cautiously bearish despite this morning’s interest rate increase by the Reserve Bank of Australia after this currency pair established a new horizontal resistance area. The Ichimoku Kinko Hyo Cloud narrowed after a bullish crossover, which is vulnerable to a reversal amid the lack of bullishness. Volatility may rise with the Kijun-sen and the Tenkan-sen drifting higher but losing momentum. Traders should also monitor the CCI in extreme overbought territory, on the verge of a breakdown. This technical indicator has plenty of downside potential, and a move below 100 could trigger a sell-off. Can bears regain control over the AUD/JPY and pressure price action into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the AUD/JPY remain inside the or breakdown below the 96.350 to 96.950 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 96.650
- Take Profit Zone: 94.350 – 94.850
- Stop Loss Level: 97.350
Should price action for the AUD/JPY breakout above 96.950, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 97.350
- Take Profit Zone: 97.850 – 98.350
- Stop Loss Level: 96.950
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