AUD/JPY Approaches Major Downtrend Line as Australian Economic Fundamentals Improves

Japan – Trade Balance

On Sunday, at GMT 11:50 p.m., the Japanese Ministry of Finance released the month-over-month national trade balance figure, which measures the difference in value between the total imported and exported goods over the last month. This data is usually reported by being seasonally adjusted in order to gauge the true changes in the trade balance situation of Japan.

The demand for a nation’s currency is directly correlated to the export it makes minus the net imports because foreigners must convert their currency to Yen in order to pay Japanese exporters. Hence, binary options investors and market analysts consider the trade balance to be a leading indicator of a currency’s strength.

Last month, the Japanese trade balance figure came out at 0.35 trillion (yen) and for the forecast for this month was set at 0.27 trillion. However, the actual figure came out much higher than expected, at 0.36 trillion.

Australia – CB Leading Index

On Tuesday, at GMT 3:30 p.m., the Conference Board Inc will release the month-over-month leading index for Australia, which measures the changes in the level of a composite index based seven other major fundamental indicators.

Since the CB leading index aggregates some of the other indicator data, binary options traders consider this to be an important representation of the overall Australian economy. However, since most of these data are previously released, the CB leading index tends to have a minimized immediate market impact.

Last month, the CB leading index increased by 0.2% and if the positive trend continues this month, it would likely have a bullish influence on the Australian Dollar against other major currencies.

AUD/JPY Forecast

Since forming a large bearish bar on September 21, the AUD/JPY remained in a downtrend and formed a well-respected downtrend line in the process. At the end of November, the AUD/JPY fell close to 84.50 and found a strong support around this area. Consequently, the pair started a bullish retracement and it is currently approaching the downtrend line, which is close to the resistance near 87.00 level.

As the Australian CB leading index went up 0.2% last month and it appears to remain positive this month, we believe it would set a bullish fundamental outlook for the AUD/JPY this week. Therefore, if the AUD/JPY breaks above the downtrend line and closes above the resistance near 87.00, it would likely attract additional bullish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities above this major resistance level around 87.00.

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

LinkedIn Google+ 

Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

Leave a Reply