Forex Market: AUD/JPY trading outlook for November 16th

Friday’s trade saw AUD/JPY within the range of 87.13-87.86. The pair closed at 87.47, ticking up 0.10% on a daily basis, while marking its third straight trading day of gains. On November 12th the pair went up as high as 87.97, reaching its highest level since October 26th, when a daily high of 88.03 was registered. In weekly terms, AUD/JPY advanced 0.76%, while extending the gain from the week ended on November 8th. It has been the strongest back-to-back weekly gain since early September.

On Monday (November 16th) AUD/JPY trading may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

Australia

New Motor Vehicle Sales

At 0:30 GMT on Monday the Australian Bureau of Statistics is scheduled to report on new motor vehicle sales in the country for October. New vehicle registrations rose to 100 372 vehicles in September from 95 101 in August, or a 5.5% increase. Septembers figure has been the highest one on record. New car sales, as an indicator, reflect how strong consumer confidence is. In case consumers are willing to make large-ticket purchases, such as new automobiles, this suggests they have greater confidence regarding their financial prospects. However, as new car sales account for a small portion of the Australian Gross Domestic Product, a potential increase would have a limited bullish effect on the national currency.

Japan

Gross Domestic Product – preliminary estimate

Japans preliminary annualized GDP estimate probably showed a 0.2% contraction during the third quarter of the year, according to the median forecast by experts. The nations economy contracted at an annualized rate of 1.2% in the second quarter, according to final data released on September 7th. The latter has been the first GDP drop in four quarters.

On a quarterly basis, the preliminary GDP probably pointed to a zero growth in Q3, according to expectations. In Q2 economy shrank 0.3%, according to the final estimate, or a revision up from a preliminary 0.4% contraction. It has been the first GDP drop since the third quarter of 2014. Private demand shrank 0.3% in Q2, shedding 0.2 percentage point from growth. Private consumption, which accounts for almost 60% of the GDP, shrank 0.7%, subtracting 0.4 percentage point from growth. Private non-residential investment went down 0.9% during the quarter, subtracting 0.1 percentage point from growth, while private residential investment increased 1.9%, adding 0.1 percentage point to growth. Private inventories added 0.3 percentage point to growth, according to the report by Japans Cabinet Office. Public demand rose 0.7% in the second quarter, while public investment expanded 2.1%, contributing 0.2% and 0.1% to growth respectively. Japanese exports shrank 4.4% during the period, subtracting 0.8% from growth, while imports went down 2.6%, adding 0.6% to growth.

In case the Japanese economy contracted more than anticipated in Q3, this would have a strong bearish effect on the yen. The preliminary GDP report is due out at 23:50 GMT on Sunday (November 15th).

Correlation with Major Pairs

Taking into account the week ended on November 15th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

AUD/JPY to AUD/USD (0.9830, or very strong)
AUD/JPY to EUR/USD (0.8880, or very strong)
AUD/JPY to USD/CAD (0.8349, or very strong)
AUD/JPY to GBP/USD (0.7604, or strong)
AUD/JPY to NZD/USD (0.2887, or weak)
AUD/JPY to USD/CHF (-0.2540, or weak)
AUD/JPY to USD/JPY (-0.8485, or very strong)

1. During the examined period AUD/JPY moved strongly in one and the same direction with GBP/USD.

2. AUD/JPY moved almost equally in one and the same direction with AUD/USD, EUR/USD and USD/CAD during the week. This relationship was the most pronounced between AUD/JPY and AUD/USD.

3. AUD/JPY moved almost equally in the opposite direction compared to USD/JPY.

4. The correlation between AUD/JPY and NZD/USD, AUD/JPY and USD/CHF was insignificant during the period in question.

Daily and Weekly Pivot Levels

By employing the traditional calculation method, the Monday pivot levels for AUD/JPY are presented as follows:

Central Pivot Point – 87.49
R1 – 87.84
R2 – 88.22
R3 – 88.57

S1 – 87.11
S2 – 86.76
S3 – 86.38

By using the traditional method of calculation again, the weekly pivot levels for AUD/JPY are presented as follows:

Central Pivot Point – 87.27
R1 – 88.18
R2 – 88.88
R3 – 89.79

S1 – 86.57
S2 – 85.66
S3 – 84.96