China’s stock markets were given a nice bump on Monday after the Politburo announced an easing of policy stance. This allowed AUD/JPY and USD/JPY to deliver strong bounce from key support levels, as the yen weakened during a risk-on session for FX and commodities.
By : Matt Simpson, Market Analyst
The Politburo said on Monday that China will switch to an “appropriately loose” monetary policy in 2025, marking the first time it has eased its stance since the GFC. Unconventional counter-cyclical adjustments will be stepped up, to focus on boosting consumption and expanding domestic demand.
Click the website link below to get our exclusive Guide to index trading in Q4 2024.
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Fed rate cuts alone may not be enough to keep driving US indices higher in Q4 if traders sniff out a recession on the horizon in 2025.
China’s indices rallied on the announcement, sending Hang Seng futures over 8% higher from Monday’s low while China A50 futures gained over 6% from the week’s low. The yuan was stable which prevented USD/CNH from breaking above 7.3, in turn allowing AUD/USD to rally from its 2022 trend support level.
AUD/USD and NZD/USD were the strongest FX majors during a risk-on day while the Japanese yen was the weakest. This could see AUD/JPY and USD/JPY gain further traction for bulls over the near term before their anticipated next legs lower begin.
It is highly unlikely the RBA will cut rates today, despite growing excitement that they will cut three times next year, beginning in April. They’ll want to see tomorrow’s jobs and quarterly CPI figures in January before entertaining any such thoughts, but something to look out for in their statement is if or how they acknowledge last week’s weak GDP figures. If they do, it could pull forward expectations of a cut to Q1 a tad and unwind some of yesterday’s gains on AUD/USD.
Click the website link below to get our exclusive Guide to USD/JPY trading in Q4 2024.
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After a big unwind in the “Yen Carry Trade” in Q3, interest rates in the US will be one of the most important drivers for USD/JPY in Q4.
Two weeks ago, I outlined a bearish scenario for AUD/JPY based on price action clues on the weekly chart. Not that I’m complaining, but the bearish move arrived sooner than I had anticipated (within 24 hours of the video, to be exact). But the market has clearly topped out for now and could be headed for the August low, a break beneath which brings the 86 handle into focus near the 2021 high / 2023 low.
Yet bullish mean reversion is underway, having formed a bullish engulfing day around a weekly VPOC (volume point of control). Bulls could seek dips within Monday’s range to target the 20-day EMA (98.42) or 50-day EMA (99.21) near the original breakout level of 99.44.
Alternatively, bears could wait for evidence of a swing high to form on a lower timeframe around forementioned resistance levels, in anticipation of its next leg lower once momentum realigns with the move on the weekly chart.
Last Wednesday I warned of an incoming bounce on USD/JPY. It reached my weekly pivot-point target of 151.3 but 152 is still up for the taking, with prices just 70-ips beneath the level. Yet Monday’s price action now has me wondering whether another bounce could exceed 152 before USD/JPY embarks on its next leg lower.
A higher low formed on Friday in the form of a Rickshaw man doji, perfectly at the August high and October VPOC. Bullish range expansion kicked in on Monday. Also note that prices are now testing the top of last week’s spinning top doji.
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
forex.com
China's stock markets were given a nice bump on Monday after the Politburo announced an easing of policy stance. This allowed AUD/JPY and USD/JPY to deliver strong bounce from key support levels, as the yen weakened during a risk-on session for FX...
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
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By : Matt Simpson, Market Analyst
The Politburo said on Monday that China will switch to an “appropriately loose” monetary policy in 2025, marking the first time it has eased its stance since the GFC. Unconventional counter-cyclical adjustments will be stepped up, to focus on boosting consumption and expanding domestic demand.
Click the website link below to get our exclusive Guide to index trading in Q4 2024.
Indices Q4 2024 Market Outlook - FOREX.com US
Fed rate cuts alone may not be enough to keep driving US indices higher in Q4 if traders sniff out a recession on the horizon in 2025.
China’s indices rallied on the announcement, sending Hang Seng futures over 8% higher from Monday’s low while China A50 futures gained over 6% from the week’s low. The yuan was stable which prevented USD/CNH from breaking above 7.3, in turn allowing AUD/USD to rally from its 2022 trend support level.
AUD/USD and NZD/USD were the strongest FX majors during a risk-on day while the Japanese yen was the weakest. This could see AUD/JPY and USD/JPY gain further traction for bulls over the near term before their anticipated next legs lower begin.
Economic events in focus (AEDT)
It is highly unlikely the RBA will cut rates today, despite growing excitement that they will cut three times next year, beginning in April. They’ll want to see tomorrow’s jobs and quarterly CPI figures in January before entertaining any such thoughts, but something to look out for in their statement is if or how they acknowledge last week’s weak GDP figures. If they do, it could pull forward expectations of a cut to Q1 a tad and unwind some of yesterday’s gains on AUD/USD.
- 10:50 – JP GDP external demand (Q4), money supply (Nov)
- 11:30 – AU business confidence (NAB)
- 14:00 – CN trade balance (Nov)
- 14:30 – RBA interest rate decision (no change expected)
- 14:35 – JP 5-year JGB
- 17:00 – JP machine tool orders (Nov)
- 18:00 – DE CPI
- 22:00 – US small business optimism (Nov)
Click the website link below to get our exclusive Guide to USD/JPY trading in Q4 2024.
USD JPY Q4 2024 Market Outlook - FOREX.com US
After a big unwind in the “Yen Carry Trade” in Q3, interest rates in the US will be one of the most important drivers for USD/JPY in Q4.
AUD/JPY technical analysis
Two weeks ago, I outlined a bearish scenario for AUD/JPY based on price action clues on the weekly chart. Not that I’m complaining, but the bearish move arrived sooner than I had anticipated (within 24 hours of the video, to be exact). But the market has clearly topped out for now and could be headed for the August low, a break beneath which brings the 86 handle into focus near the 2021 high / 2023 low.
Yet bullish mean reversion is underway, having formed a bullish engulfing day around a weekly VPOC (volume point of control). Bulls could seek dips within Monday’s range to target the 20-day EMA (98.42) or 50-day EMA (99.21) near the original breakout level of 99.44.
Alternatively, bears could wait for evidence of a swing high to form on a lower timeframe around forementioned resistance levels, in anticipation of its next leg lower once momentum realigns with the move on the weekly chart.
USD/JPY technical analysis:
Last Wednesday I warned of an incoming bounce on USD/JPY. It reached my weekly pivot-point target of 151.3 but 152 is still up for the taking, with prices just 70-ips beneath the level. Yet Monday’s price action now has me wondering whether another bounce could exceed 152 before USD/JPY embarks on its next leg lower.
A higher low formed on Friday in the form of a Rickshaw man doji, perfectly at the August high and October VPOC. Bullish range expansion kicked in on Monday. Also note that prices are now testing the top of last week’s spinning top doji.
- Like AUD/JPY, bulls could seek dips within Monday’s range on USD/JPY in anticipation of another leg higher. A break above 152 brings the 153.28 low into focus.
- Given the daily RSI (2) is approaching overbought, bears could also watch for evidence of a swing high around 152, 153-153.28 in anticipation of its next leg lower.
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
USD/JPY, AUD/JPY rally with China during risk-on trade
China's stock markets were given a nice bump on Monday after the Politburo announced an easing of policy stance. This allowed AUD/JPY and USD/JPY to deliver strong bounce from key support levels, as the yen weakened during a risk-on session for FX...
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
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