The Asia-pacific region is set to be a key focus going into the new day's trading as the Australian dollar and then Yen are likely to see some serious activity. Large movements in the AUDUSD seem likely as a swathe of important data is released; including business confidence data and home loan data as well. Home loans is expecting a modest dip, while economists are a little uncertain as to how business confidence data will fly in the current Australian climate. It did previously see a swing upwards, but it's been clear in the past that it can also be followed by dips, showcasing in turn that it's quite temperamental as well. Later on the day we will also get some consumer confidence data, but this will have less an impact compared to business confidence, as it has been a key worry for traders in the past.
On the charts the AUDUSD has so far been ticking upwards, after last week's USD weakness and also a swing back into risk. This was further supported by traders using the 200 day moving average as an effective tool to push the AUD higher when the bears were trying to take a swipe. At present the AUDUSD is now pushing through resistance at 0.7865 and is looking to extend higher, potentially to 0.7946 on the chart. If it could breakthrough this level there could be the potential to extend to the 80 cent barrier, but it would be hard pressed to crack through in the current climate. In the event we do see a swing lower, watch for the 20 day moving average to defend against the bears. Key support levels can be found at 0.7780 and 0.7719, but this would mean that the risk approach of the market has faltered and traders are looking to edge. Overall, the AUDUSD continues to look bullish in the face of things.
Shinzo Abe could be coming under the heat and so could Yen traders as a political storm is brewing in Japan over some transactions involving Shinzo's wife. Forged documents and a government investigation into wrong doing could see the end of Abenomics if there is a vote of no confidence, or alternatively elections held again. No one is quite sure of the complete outcome, but if there is more information uncovered it could potentially be the end of Abenomics as we know it.
The USDJPY as a result is looking bearish once again, with traders potentially betting on the fall of Abenomics and expecting the Yen to consolidate further as it once had. Abenomics had obviously been very aggressive when it came to the devaluation of the currency, but halted it recently. A new government could stop that all together. Consolidation of the Yen could see it test support levels at 106.063 and 105.298, with the possibility of extending lower if things get uglier. If it is contained then I would expect things to be more buoyed and the USDJPY to potentially swing back upwards to 107.287 and 108.281
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