The Australian central bank delivered its 25 basis point interest rate cut from 1.00% to 0.75%. This was expected by market participants following the release of minutes from the previous RBA meeting. The announcement was preceded by a surprise increase in the Australian manufacturing sector as confirmed by two different reports. The housing market remains under pressure which could impact the consumer moving forward. The AUDJPY started to contract, will this move extend further to the downside? Subscribe to the PaxForex Daily Fundamental Analysis and take the profitable side of this currency pair.
The Tankan Survey for the third-quarter pointed towards more weakness in the quarter with a depressed outlook for the fourth-quarter. The labor market remains tight and vehicle sales surged. This has helped the Japanese Yen to advance further against the Australian Dollar. Safe haven demand into the Japanese currency is expected to rise which will further increase selling pressure on the AUDJPY. How much downside should forex traders expect? Today’s fundamental analysis will take a look at price action in both directions.
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 September was reported at 54.7. Forex traders can compare this to the Australian AiG Performance of Manufacturing Index for August which was reported at 53.1.
- Australian CBA Manufacturing PMI: The Final Australian CBA Manufacturing PMI for September was reported at 50.3. Economists predicted a figure of 49.4. Forex traders can compare this to the previous Australian CBA Manufacturing PMI for September which was reported at 49.4.
- Australian CoreLogic House Prices: Australian CoreLogic House Prices for September increased by 1.1% monthly. Forex traders can compare this to Australian CoreLogic House Prices for August which increased by 1.0% monthly.
- Australian Building Approvals: Australian Building Approvals for August decreased by 1.1% monthly and by 21.5% annualized. Economists predicted an increase of 2.0% monthly and a decrease of 20.0% annualized. Forex traders can compare this to Australian Building Approvals for July which decreased by 9.7% monthly and by 28.5% annualized.
- Australian RBA Interest Rate Decision: The Australian RBA cut interest rates by 25 basis points to 0.75%. Economists predicted interest rates at 0.75%. Forex traders can compare this to the previous Australian RBA Interest Rate Decision where interest rates were left unchanged at 1.00%.
- Australian RBA Commodity Index: The Australian RBA Commodity Index for September increased by 1.8% annualized. Forex traders can compare this to the Australian RBA Commodity Index for August which increased by 6.2% annualized.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Jobless Rate and Job-to-Applicant Ratio: The Japanese Jobless Rate for August was reported at 2.2% and the Job-to-Applicant Ratio at 1.59. Economists predicted a figure of 2.3% and of 1.59. Forex traders can compare this to the Japanese Jobless Rate for July which was reported at 2.2% and to the Job-to-Applicant Ratio which was reported at 1.59.
- Japanese Tankan Survey: The Tankan Large Manufacturers Index for the third-quarter was reported at 5. Economists predicted a figure of 1. Forex traders can compare this to the Tankan Large Manufacturers Index for the second-quarter which was reported at 7. The Tankan Large Manufacturers Outlook for the third-quarter was reported at 2. Economists predicted a figure of 0. Forex traders can compare this to the Tankan Large Manufacturers Outlook for the second-quarter which was reported at 7. The Tankan Large Non-Manufacturers Index for the third-quarter was reported at 21. Economists predicted a figure of 20. Forex traders can compare this to the Tankan Large Non-Manufacturers Index for the second-quarter which was reported at 23. The Tankan Large Non-Manufacturers Outlook for the third-quarter was reported at 15. Economists predicted a figure of 16. Forex traders can compare this to the Tankan Large Non-Manufacturers Outlook for the second-quarter which was reported at 17. The Tankan Small Manufacturers Index for the third-quarter was reported at -4. Economists predicted a figure of -6. Forex traders can compare this to the Tankan Small Manufacturers Index for the second-quarter which was reported at -1. The Tankan Small Manufacturers Outlook for the third-quarter was reported at -9. Economists predicted a figure of -8. Forex traders can compare this to the Tankan Small Manufacturers Outlook for the second-quarter which was reported at -5. The Tankan Small Non-Manufacturers Index for the third-quarter was reported at 10. Economists predicted a figure of 8. Forex traders can compare this to the Tankan Small Non-Manufacturers Index for the second-quarter which was reported at 10. The Tankan Small Non-Manufacturers Outlook for the third-quarter was reported at 1. Economists predicted a figure of 1. Forex traders can compare this to the Tankan Small Non-Manufacturers Outlook for the second-quarter which was reported at 3. The Japanese Tankan Large All Industry Capex Index for the third-quarter increased by 6.6% quarterly. Economists predicted an increase of 7.0% quarterly. Forex traders can compare this to the Japanese Tankan Large All Industry Capex Index for the second-quarter which increased by 7.4% quarterly.
- Japanese Manufacturing PMI: The Final Japanese Manufacturing PMI for September was reported at 48.9. Forex traders can compare this to the previous Japanese Manufacturing PMI September which was reported at 48.9.
- Japanese Vehicle Sales: Japanese Vehicle Sales for September increased by 12.8% annualized. Forex traders can compare this to Japanese Vehicle Sales for August which increased by 4.0% annualized.
Should price action for the AUDJPY remain inside the or breakdown below the 72.500 to 73.300 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 72.550
- Take Profit Zone: 70.750 – 71.100
- Stop Loss Level: 73.650
Should price action for the AUDJPY breakout above 73.300 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 73.650
- Take Profit Zone: 74.450 – 75.150
- Stop Loss Level: 72.500
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