The Australian Dollar came under mild selling pressure after a report showed that private sector credit eased. Adding to bearish momentum was an unexpected acceleration in the rate of contraction in the Chinese manufacturing sector. The services sector also slowed down which added to growth concerns. How will the AUDJPY trade as more global economic data will trickle in throughout the session? Today’s fundamental analysis will take a look at price action in both directions.
The Bank of Japan left its interest rate unchanged at -0.10% as expected, but kept the door open to future tweaks to its monetary policy. Providing a boost to the Japanese Yen was the better-than-expected reading on industrial production, while housing starts decreased less than forecast and consumer confidence improved slightly from depressed levels. Will bears pressure the AUDJPY lower or can bulls force more upside? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for Australian Dollar trades:
- Australian Building Approvals: Australian Building Approvals for September were reported flat at 0.0% monthly and decreased by 19.0% annualized. Economists predicted a flat reading of 0.0% monthly and a decrease of 25.7% annualized. Forex traders can compare this to Australian Building Approvals for August which decreased by 0.6% monthly and by 21.5% annualized.
- Australian Private Sector Credit: Australian Private Sector Credit for September increased by 0.2% monthly and by 2.7% annualized. Economists predicted an increase of 0.3% monthly and of 2.7% annualized. Forex traders can compare this to Australian Private Sector Credit for August which increased by 0.2% monthly and by 2.9% annualized. Australian Housing Credit for September increased by 0.2% monthly. Forex traders can compare this to Australian Housing Credit for August which increased by 0.2% monthly.
- Australian Import Price Index & Australian Export Price Index: The Australian Import Price Index for the third-quarter increased by 0.4% quarterly and the Australian Export Price Index increased by 1.3% quarterly. Economists predicted an increase of 0.5% and a decrease of 0.5%. Forex traders can compare this to the Australian Import Price Index for the second-quarter which increased by 0.9% quarterly and to the Australian Export Price Index which increased by 3.8% quarterly.
- Chinese PMI: The Chinese Non-Manufacturing PMI for October was reported at 52.8 and the Chinese Manufacturing PMI at 49.3. Economists predicted a figure of 53.7 and of 49.8. Forex traders can compare this to the Chinese Non-Manufacturing PMI for September which was reported at 53.7 and to the Chinese Manufacturing PMI which was reported at 49.8. The Chinese Composite PMI for October was reported at 52.0. Forex traders can compare this to the Chinese Composite PMI for September which was reported at 53.1.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Industrial Production: Preliminary Japanese Industrial Production for September increased by 1.4% monthly and by 1.1% annualized. Economists predicted an increase of 0.4% monthly and a decrease of 0.1% annualized. Forex traders can compare this to Japanese Industrial Production for August which decreased by 1.2% monthly and by 4.7% annualized.
- Japanese Buying Foreign Bonds and Japanese Buying Foreign Stocks/Foreign Buying Japanese Bonds and Foreigners Buying Japanese Stocks: Japanese Buying Foreign Bonds for the period ending October 25th was reported at -¥1,018.5B and Japanese Buying Foreign Stocks was reported at ¥1.4B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending October 18th which was reported at ¥513.8B and to Japanese Buying Foreign Stocks which was reported at ¥42.4B. Foreign Buying Japanese Bonds for the period ending October 25th was reported at ¥26.0B and Foreigners Buying Japanese Stocks was reported at ¥649.5B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending October 18th which was reported at ¥127.4B and to Foreigners Buying Japanese Stocks which was reported at ¥522.4B.
- Bank of Japan Policy Rate and 10-Year Yield Target: The Bank of Japan Policy Rate was reported at -0.10% and the 10-Year Yield Target at 0.00%.Economists predicted a level of -0.10% and of 0.00%. Forex traders can compare this to the previously announced Bank of Japan Policy Rate which was reported at -0.10% and to the 10-Year Yield Target which was reported at 0.00%.
- Japanese Vehicle Production: Japanese Vehicle Production for August decreased by 2.2% annualized. Forex traders can compare this to Japanese Vehicle Production for July which increased by 11.7% annualized.
- Japanese Housing Starts and Construction Orders: Japanese Housing Starts for September decreased by 4.9% annualized to 0.897M units. Economists predicted a decrease of 6.7% annualized to 0.878M units. Forex traders can compare this to Japanese Housing Starts for August which decreased by 7.1% annualized to 0.891M units. Construction Orders for September decreased by 6.8% annualized. Forex traders can compare this to Construction Orders for August which decreased by 25.9% annualized.
- Japanese Consumer Confidence: Japanese Consumer Confidence for October was reported at 36.1. Economists predicted a figure of 35.2. Forex traders can compare this to Japanese Consumer Confidence for September which was reported at 35.6.
Should price action for the AUDJPY remain inside the or breakdown below the 74.550 to 75.550 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 74.800
- Take Profit Zone: 71.750 – 72.450
- Stop Loss Level: 76.150
Should price action for the AUDJPY breakout above 75.550 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 76.150
- Take Profit Zone: 78.100 – 78.900
- Stop Loss Level: 75.550
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