Today's currency market sentiment brings a bit of rebound yesterday's US dollar so far. Data from Australia and Japan disappointed, but without damage to AUD and JPY. The stock market is balancing at the level of yesterday's close. The trade session in Asia is calm, where the attempts to further strengthen USD were put down during the session. The yield on 10-year US bonds is about 1 bp lower at 3.066 percent, which also hampers the dollar a bit: EUR/USD stopped at 1.1840. The stock market is not willing to give direction and fluctuates around closing levels from the previous session. Japanese Nikkei225 drops 0.4%, but Hang Seng gains 0.1%.
On Wednesday 16th of May, the event calendar is busy in important data releases: Gross Domestic Product data from Japan, Wage Price Index data from Australia, CPI data from Germany and the Eurozone, Manufacturing Sales data from Canada and Building Permits and Housing Starts data from the US. In the meantime, there is a scheduled speech from ECB President Mario Draghi, FOMC Member Raphael W. Bostic, SNB Chairman Thomas Jordan and BOC Deputy Governor Lawrence Schembri.
AUD/JPY analysis for 16/05/2018:
The initial estimate of Japan's GDP for the first quarter was -0.2% against expected 0.0%. The annualized rate was 0.6%, and the data for the previous quarter was revised down to 0.6% from 1.6%. These negative dynamics are the first case since 2015. USD/JPY did not react to the data and currently sits at 110.25.The Westpac consumer confidence index from Australia fell in May by 0.6% after the same drop a month earlier. The wage index disappointed by a 0.5% q/q against expected 0.6% AUD/USD fell after data to 0.7447, but managed to rebound at 0.7480.
Let's now take a look at the AUD/JPY technical picture at the H4 time frame. The price has been capped just below the 61% Fibo retracement at the level of 82.80 and currently is testing the technical resistance at the level of 82.73. The key technical support is seen at the level of 82.11 and the price has bounced twice from this level. Momentum is still above its fifty level, so another move higher is still on the table. In a case of a further breakout above the level of 82.80, the next target is seen at the level of 83.02 ( next technical resistance level).