• AUD/JPY seesaws between 200-bar SMA and near-term trend-line resistances.
  • Positive MACD histogram strengthens the case for an upside break.

With its repeated turns from the key simple moving average (SMA) and a week-long falling trend-line, AUD/JPY trades near 73.00 amid initial Asian session on Tuesday.

While downside break of 200-bar SMA, at 72.70 now, needs validation from August 21 high near 72.40, further declines might not hesitate to visit 61.8% Fibonacci retracement of late-August to mid-September advances, at 71.70.

During the pair’s extended south-run, monthly bottom surrounding 71.10, 70.75 and 70.30 could please bears.

On the contrary, the bullish signal from 12-bar moving average convergence and divergence (MACD) indicator increases the odds of the pair’s another confrontation to week-long horizontal area nearing 73.31/33, a break of which could accelerate the recovery to a downward sloping trendline since September 13, around 73.50.

In a case where prices rally beyond 73.50, 73.90 and monthly tops close to 74.50 will be the buyers’ favorites.

AUD/JPY 4-hour chart

Trend: bullish

  • GBP/USD stops further declines with little reaction to Brexit news during early Asia.
  • The UK PM Johnson to soon reveal final Brexit plan and might ignore Benn Bill. Though, Senior Judges prepare to face the action.
  • Manufacturing activity numbers to decorate economic calendar while trade/political headlines to offer busy sessions ahead.

Given the recently flashed mixed Brexit signals from global media, GBP/USD rakes the rounds to 1.2290 during Tuesday morning in Asia.

While the UK Telegraph came first to broke the news that the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson won’t take more than 24 hours to reveal his Brexit secret to the European leaders, it also shared the headlines that the senior judges at the British Supreme Court are expected to hear any judicial review against Boris Johnson if he fails to abide by the Benn act. By providing extra details, the UK Times reported that PM Johnson is prepared to ask the EU not to extend Article 50 deadline, which is October 31 by now.

Elsewhere, the Hugginton Post says that the weekly meeting of the Parliamentary Labour Party (PLP) saw backbenchers urge the Labour leader to either back a ‘confirmatory’ referendum on any Boris Johnson deal – or to instigate one during a temporary caretaker government.

It should also be noted that the UK Finance Minister Sajid Javid earlier signalled that he hopes the UK could live the EU with a deal by October 31. Though, the diplomat didn’t rule-out calls to leave without a deal.

While Brexit headlines will keep the GBP/USD pair traders entertained, month-start manufacturing activity numbers from the UK and the United States (US) will be the key to watch. The UK Manufacturing Purchasing Managers’ Index (PMI) is expected to weaken to 47.0 versus 47.4 while the US ISM Manufacturing PMI could increase to 50.0 from 49.1 in September.

Technical Analysis

Unless breaking 50-day simple moving average (SMA) level of 1.2260, the pair is less likely to revisit the 1.2200 mark, nearing early-August tops. Alternatively, 21-day SMA at 1.2366 holds the gate of recovery to 1.2400 and 100-day SMA level of 1.2445.

  • Boris Johnson is asking the EU to rule out a further extension to article 50 as part of a new Brexit deal.
  • The lord chief justice and two other judges are expected to hear any judicial review against Boris Johnson.

The Times has reported that Boris Johnson is asking the EU to rule out a further extension to article 50 as part of a new Brexit deal. This prompted senior judges to start drawing up plans for an emergency legal challenge if the prime minister fails to seek a delay to the October 31 Brexit deadline, The Times understands:

"The lord chief justice and two other judges are expected to hear any judicial review against Boris Johnson if he fails to abide by the Benn act, potentially propelling the judiciary into another political confrontation. The act requires Mr Johnson to send a letter asking for delay by October 19 if no deal has been reached with the EU by then. He has insisted he would rather be “dead in a ditch” than do so, although he has also said that he will comply with the law."

  • UK PM Johnson to reveal final Brexit Plan to EU leaders within 24 hours – Telegraph

The pound has been relatively steady on Monday although faces pressures related to the Brexit uncertainty. Prospects of a hard-Brexit, as well as the compelling case for the Bank of England to cut rates, leaves the pound vulnerable to downside pressures.

  • AUD/USD trades catch a breath ahead of the key day.
  • Manufacturing gauges and housing data to precede the all-important RBA decision.
  • The RBA Governor’s speech, trade/political headlines will entertain markets afterward.

With the markets settling their eyes on the Reserve Bank of Australia’s (RBA) rate decision, the AUD/USD pair stays modestly changed to 0.6750 during the early Asian session on Tuesday.

Alike other Antipodeans, the Aussie pair has been under pressure mainly because of the US Dollar (USD) strength and the US-China trade jitters, which in turn restricted the quote from cheering upbeat manufacturing activity numbers from the largest customer China.

The King Dollar holds its head high as traders rush to the US currency amid times of uncertainty considering as the safest investment. Latest upbeat comments from the US Federal Reserve officials added a sentiment to make it the cleanest shirt in the dirty laundry.

Investor sentiment was little changed by the latest news that Australia's Prime Minister Scott Morrison is also involved in the case that has its roots from Robert Mueller investigation.

While September month data of AiG Performance of Mfg Index, Commonwealth Bank Manufacturing PMI and Building Permits from Australia could offer intermediate moves to the pair, market players are more interested to look forward to the RBA’s interest rate decision and the rate statement up for grabs at 04:30 GMT.

Most market consensus favors 25 basis points (bps) cut to the RBA’s Cash Rate and hence the central bank’s signals to future such actions will be closely observed. “We expect that the Bank is likely to cut the cash rate by 25bps to 0.75%. Its forecasts for Q2 GDP fell short of Aug SoMP forecasts, surprising the RBA. With the RBA now playing catch-up to achieve its year-end ’19 and 2020 GDP forecasts that are premised on a cut by Nov, and signs that wages growth has stalled, the RBA need not wait to cut. RBA Gov Lowe is set to deliver remarks at a RBA Board Dinner with the business community in Melbourne. The subject of his speech has not been disclosed,” says TD Securities ahead of the event.

Following the RBA, the US ISM Manufacturing Purchasing Manager Index (PMI) data and trade news can make the markets alive while China is off for a week.

Technical Analysis

The pair’s sustained trading below 23.6% Fibonacci retracement of July-August downside, at 0.6772, keeps portraying its weakness that can drag it further south to 0.6740/35 and 0.6700 rest-points. However, an upside clearance of 0.6772 can trigger fresh upside to 21-day simple moving average (SMA) level around 0.6810.

  • NZD/USD carries weakness after business sentiment gauge dropped to April 2009 levels.
  • Broad USD strength, mixed trade sentiment weakens the Kiwi.
  • RBA rate decision, the US ISM Manufacturing PMI in the spotlight for now.

With the private business sentiment gauge dropping to a multi-year low, NZD/USD extends its weakness forward while taking rounds to 0.6260 at the start of Tuesday’s Asian session.

The third quarter (Q3) Business Confidence from the New Zealand Institute of Economic Research (NZIER) dropped below prior -34% to the lowest since April 2009 while registering -35% mark. Additionally, the research firm turns downbeat on major economic catalysts as the quarterly report says, “result suggests annual Gross Domestic Product (GDP) growth will ease below 1 percent later this year. Manufacturing sector remains the most pessimistic, continued weakening in both domestic and export demand, continued uncertainty over the trade war between the US and China.”

With this, calls of the underlying pessimism in the New Zealand economy gain market attention, which in turn can push the Reserve Bank of New Zealand (RBNZ) to drop its latest avoidance of using unconventional monetary policy measures.

The Kiwi earlier dropped to the fresh low since September 2015 after the overall US Dollar (USD) strength disappointed the commodity-linked currencies while a lack of positive signals from the US-China trade front added weakness to the Antipodeans. It should also be noted that week-start second-tier data from New Zealand (NZ) failed to please the Kiwi buyers for long.

With no major economic data from NZ, coupled with a week-long Chinese holiday season, investors will now concentrate on monetary policy decision from the largest customer, i.e. Australia. The Reserve Bank of Australia (RBA) is all but certain to offer a 0.25% Cash Rate cut. However, traders are more interested in looking for signals to future such moves. Following that, the US ISM Manufacturing Purchasing Managers’ Index (PMI) for September, expected 50.0 versus 49.1 prior, will gain market attention.

Technical Analysis

NZD/USD is now up for grabbing the falling trend-line since May 2019, 0.6210 now, a break of which could recall 2015 lows nearing 0.6080. Alternatively, immediate trend-line resistance around 0.6310 could limit the pair’s run-up to 21-day simple moving average (SMA) level of 0.6338 now.