AUD/JPY pair has its eye on beating the 76.87 level

Justin Freeman

The last few weeks have been fairly positive for the Aussie dollar, with the currency enjoying upward moves in various pairs.

The currency, which tends to benefit in particular from moves towards a more pro-risk sentiment for reasons such as its trading relationship with China, has swooped in to pick up some demand caused by the move away from the greenback.

According to the price charts, the pair has found itself going in a positive direction up a wedge pattern.

Strategists pointed out this week that this pattern was now experiencing a fair bit of pressure as the pair got close to the top – suggesting that it could disintegrate at some point soon.

If this was to happen, say analysts, it could still continue to rise – just in a different form.

One figure that has been mentioned is 76.87, with one strategist predicting that if the pair gets to this by the end of Wednesday’s trading, then the move would be on the up.

Australia is still grappling with the effects of the coronavirus pandemic, and some key parts of the country are still dealing with outbreaks.

This includes Victoria, which contains the city of Melbourne – an important node in the Australian economy.

In terms of the economic calendar, meanwhile, both of these currencies have a number of key events to face as the week comes to a close.

On Thursday, for example, there will be a preliminary Commonwealth Bank Services purchasing managers’ index release for August from Australia.

This is due to come out at 11pm GMT – for services, this was last recorded at 58.2.

For manufacturing, however, it was last recorded at 54.

In Japan, meanwhile, the national consumer price index for July will be out at 11:30pm GMT.

Including food and energy, this metric was last seen at 0.1% when measured year on year – though analysts have not yet agreed on a consensus-based prediction of how it might change.

Excluding fresh food, however, the metric is expected to show a slight surge year on year – this time from 0% to 0.1%.

Looking ahead to Friday, the Jibun Bank Manufacturing purchasing managers’ index will keep Japan in the spotlight even further.

This will again be preliminary and will be released at 12:30am GMT.

Next week will be quiet for both currencies, though Wednesday morning will begin with an Australian release looking at the recent performance of the construction sector there.

The Construction Work Done measure for Q2 2020 is expected to show a change from -1% to -1.5% – a development that has the potential to worry Aussie dollar traders as it could suggest a slowdown in building.

On Thursday of next week, meanwhile, the Tokyo consumer price index will be out at 11:30pm GMT.

This will cover the month of August and was last recorded at 0.6%.

Justin Freeman

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