Forex Market: AUD/JPY trading outlook for November 30th

Friday’s trade saw AUD/JPY within the range of 88.06-88.77. The pair closed at 88.38, shedding 0.25% on a daily basis, while extending the loss from Thursday. The daily low has been the lowest level since November 24th, when a low of 88.00 was registered. In weekly terms, AUD/JPY lost 0.70% this week, while marking its first drop in the past four weeks. On the other hand, the pair is up 2.62% so far during the current month.

On Monday (November 30th) AUD/JPY trading may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

Australia

Inflation estimate

At 23:30 GMT on Sunday (November 29th) the University of Melbourne will release its estimate of inflation in Australian economy as of November. Annualized inflation estimate for October pointed to a rate of 1.8%, after a level of 1.9% in September. The latter has been the highest rate since November 2014, when an annual rate of 2.2% was projected. If inflation rate rises, this adds to the case of an interest rate hike by the Reserve Bank of Australia (RBA), which usually has a bullish effect on the national currency. It is so, because assets, offering higher yields tend to attract more international investors, who will look to buy the domestic currency and respectively, its demand will be boosted.

Private sector lending

Private sector lending in Australia probably expanded for a 52nd consecutive month in October, going up at a monthly rate of 0.6%, according to the median forecast by experts. In September compared to August lending surged 0.8%. This indicator reflects the ability of the nations private sector to afford huge expenditures, which could be a driving force behind economic growth. Thus, the indicator provides clues over general business conditions in Australia. In case private sector lending expanded at a more considerable pace than projected, this would boost the Australian dollar. The Reserve Bank of Australia is to release the official data at 0:30 GMT on Monday.

Japan

Industrial Production – preliminary estimate

The Japanese Ministry of Economy, Trade and Industry is to report on the preliminary estimate of the nations index of industrial production for October at 23:50 GMT on Sunday. Annualized industrial production contracted at a final rate of 0.8% in September, up from a preliminary estimate pointing to a 0.9% decline. September has been the second consecutive month of contraction and also the sharpest one since May 2015, when output shrank 3.9% year-on-year.

In monthly terms, Japanese industrial production expanded at a final 1.1% in September, up from a preliminary estimate of a 1.0% surge. It has been the steepest monthly increase since June 2015.

This index reflects the business cycle and measures the change in the total inflation-adjusted value of production in sectors such as manufacturing, mining and utilities. Industrial production index performance is a key indicator, providing clues over how strong inflationary pressure in the country might be. It also belongs to the group of coincident indicators and, as such, any change it shows usually echoes similar shifts in macroeconomic activity as a whole. Therefore, faster annualized rates of contraction would have a moderate-to-strong bearish effect on the Japanese yen.

Correlation with Major Pairs

Taking into account the week ended on November 29th 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 (0.9754, or very strong)
AUD/JPY to NZD/USD (0.7876, or strong)
AUD/JPY to EUR/USD (0.4991, or moderate)
AUD/JPY to GBP/USD (0.3826, or moderate)
AUD/JPY to USD/CHF (-0.4637, or moderate)
AUD/JPY to USD/JPY (-0.6931, or strong)
AUD/JPY to USD/CAD (-0.8550, or very strong)

1. During the examined period AUD/JPY moved strongly in one and the same direction with NZD/USD, while moving strongly in the opposite direction compared to USD/JPY.

2. AUD/JPY moved almost equally in one and the same direction with AUD/USD during the week, while moving almost equally in the opposite direction compared to USD/CAD.

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 – 88.40
R1 – 88.75
R2 – 89.11
R3 – 89.46

S1 – 88.04
S2 – 87.69
S3 – 87.33

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

Central Pivot Point – 88.52
R1 – 89.03
R2 – 89.69
R3 – 90.20

S1 – 87.86
S2 – 87.35
S3 – 86.69