Play of the Day: AUD/JPY’s Short-Term Trend Continuation Trade

Yo, AUD/JPY looks ready to extend a short-term trend after Australia printed its labor market numbers!

In case you missed it, Australia released a report that showed the country’s unemployment rate remaining at 3.7% in August. A net of 64.9K jobs was added, better than the 25.4K expected and July’s 1.4K net job losses.

But the devil in the details caused some discomfort for AUD bulls. For one thing, part-time employment made up 62.1K of the 64.9K job increases for the month.

Monthly hours in ALL jobs also declined by 0.5% in August. Not good if the RBA is looking for sustained growth while watching inflation decelerate.

AUD/JPY 15-Minute Forex Charts by TV

AUD/JPY, which popped up to just under the 95.00 psychological handle dropped all the way to its 94.50 lows during the Asian session.

Does this mean that AUD/JPY’s uptrend is done?

Not necessarily. Keep in mind that Japan’s core machinery orders data missed expectations earlier today and may influence JPY buyers to think twice about holding the safe haven.

And then there’s the risk-friendly trading environment in the markets as traders price in the Fed (and maybe the ECB) possibly not doing much more to tighten their monetary policies despite their hawkish statements.

Today’s U.S. PPI and retail sales data and China’s data dump early tomorrow may make or break AUD/JPY’s uptrend.

Investors see core producer prices AND consumer retail activity slowing down in August, which could support less hawkish biases for the Fed. Meanwhile, China’s business and consumer activity reports are expected to print slightly better numbers in August.

If we see more of the “peak interest rate” themes and some relief over China’s growth prospects, then AUD/JPY may extend its uptrend. The pair may see demand around the 94.60 Pivot Point level or the 94.50 area closer to the 15-minute chart’s 100 and 200 SMAs as well as the ascending channel support.

For the bulls, the 94.90 previous high area would make for a good initial target. Of course, you can also aim for new monthly highs if there’s enough risk-taking in the next trading sessions.

Before you buy AUD/JPY like you’ll use your profits to buy the new iPhone 15, though, take note that AUD is seeing limited buying pressure right now. Feel free to wait for fresh catalysts, better entry levels, or confirmation candlesticks before you enter any long position.

But if you’re set in your entry and exit targets, then you can concentrate on using your best risk management moves. Good luck and good trading this one!

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