AUD/JPY – Technical Analysis for Forex Trading & CFDs.
Australia – Cash Rate
Tomorrow, at GMT 3:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate, which is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.
Since short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies, Forex traders pay close attention to any changes in the official cash rate.
The RBA left the cash rate at 1.5% in their last meeting and the forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.
Japan – Average Cash Earnings
On Friday, at GMT 12:00 am, the Japanese Ministry of Health, Labour and Welfare released the year-over-year average cash earnings, which measures the changes in the total value of employment income collected by workers in the country over the past 12 months.
Since earnings are directly correlated with consumer spending, Forex investors consider a rise in the average cash earnings as a signal that the Japanese consumers will likely increase their spending. As consumer spending makes up a large portion of the Japanese GDP, it can predict the future strength of the Yen.
Last month, the Japanese average cash earnings decreased by -0.6% and the forecast for this month is currently set at a 0.5% increase.
Since the beginning of August, the AUD/JPY has remained bullish, but since the formation of a large bearish bar that pushed the price below the support near 89.30 on September 21, it started a bearish retracement. However, after falling around 230 pips in the last two weeks, the AUD/JPY found a strong support near the 87.90 level.
As the Reserve Bank of Australia is set to keep their overnight cash rate unchanged at 1.5%, but the Japanese average cash earnings figure is expected to increase by 0.5% after coming out at -0.6% last month, we believe it would set a bearish fundamental outlook for the AUD/JPY this week. Therefore, if the AUD/JPY breaks and closes below the support level around 87.90, it would likely attract an additional bearish momentum in the market.
Hence, Australian Forex traders should look out for trading opportunities below this major support level around 87.90.