Watch out for this potential reversal!
Before moving on, ICYMI, yesterday’s watchlist checked out EUR/AUD’s inverted head and shoulders pattern ahead of Australia’s employment report. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. headline retail sales stayed flat in July vs. estimated 0.1% uptick
U.S. core retail sales up 0.4% vs. projected 0.1% decline
EIA crude oil inventories fell by 7.1 million barrelsFOMC minutes: Rates would have to hit “sufficiently restrictive” level then remain
FOMC: Spending and production have softened, but jobs gains robust
FOMC: Inflation remains elevated
Australian economy lost 40.9K jobs in July vs. estimated 26.5K gain
Australia’s jobless rate improved from 3.5% to 3.4%
Swiss trade surplus narrowed from 3.68B CHF to 3.58B CHF
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone final CPI readings at 9:00 am GMT
U.S. Philly Fed manufacturing index at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
FOMC member George’s testimony at 5:20 pm GMT
New Zealand trade balance at 10:45 pm GMT
U.K. GfK consumer confidence index at 11:01 pm GMT
What to Watch: AUD/JPY
AUD/JPY 1-hour Forex Chart
The Land Down Under’s jobs report turned out to be a huge miss!
Instead of adding 26.5K positions in July, the economy shed 40.9K workers and saw quite a drop in the labor force participation rate.
Is this enough to dampen RBA tightening hopes?
If so, AUD/JPY could carry on with its reversal from the uptrend, following the completion of its head and shoulders pattern.The pair has yet to break below the neckline near the 93.00 handle to confirm that a downtrend is underway. If that happens, AUD/JPY could be in for a drop that’s roughly 200 pips or the same height as the formation.
I’m seeing a bearish moving average crossover that could confirm the presence of selling pressure. However, Stochastic is just starting to pull higher from the oversold area to signal that Aussie bears want to take it easy.
Even though there are no major economic catalysts lined up in the New York session, market sentiment could still shake things up a bit. After all, any big pullbacks from the latest equity rallies could prop safe-havens higher.