Forex Market: AUD/JPY trading forecast for September 28th

Friday’s trade saw AUD/JPY within the range of 83.81-85.06. The pair closed at 84.69, soaring 0.39% on a daily basis, while extending gains from Thursday. The daily high has been the highest level since September 23rd, when the cross registered a high of 85.27. In weekly terms, AUD/JPY lost 1.83%, or the first drop in the past three weeks.

No relevant macroeconomic reports and other events, which may influence AUD/JPY trading, are scheduled for Monday (September 28th).

Correlation with Major Pairs

Taking into account the week ended on September 27th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

AUD/JPY to AUD/USD (0.9770, or very strong)
AUD/JPY to GBP/USD (0.9111, or very strong)
AUD/JPY to USD/JPY (0.4417, or moderate)
AUD/JPY to NZD/USD (-0.0980, or very weak)
AUD/JPY to EUR/USD (-0.3757, or moderate)
AUD/JPY to USD/CAD (-0.8133, or very strong)
AUD/JPY to USD/CHF (-0.8155, or very strong)

1. During the examined period AUD/JPY moved almost equally in one and the same direction with AUD/USD and GBP/USD, while moving almost equally in the opposite direction compared to USD/CAD and USD/CHF.

2. AUD/JPY moved almost independently compared to NZD/USD during the past week.

3. The correlation between AUD/JPY and USD/JPY, AUD/JPY and EUR/USD was moderate during the period in question.

Bond Yield Spread

The yield on Australias 2-year government bonds went as high as 1.938% on September 25th, or the highest level since September 22nd (1.954%), after which it slid to 1.912% at the close to lose 0.007 percentage point on a daily basis.

The yield on Japan’s 2-year government bonds climbed as high as 0.017% on September 25th, after which it fell to 0.014% at the close to lose 0.002 percentage point for the day, while marking a third consecutive trading day of decline.

The spread between 2-year Australian and 2-year Japanese bond yields, which reflects the flow of funds in a short term, shrank to 1.898% on September 25th from 1.903% during the prior day. The September 25th yield spread has been the lowest one since September 18th, when the difference was 1.894%.

Meanwhile, the yield on Australias 10-year government bonds soared as high as 2.759% on September 25th, or the highest level since September 22nd (2.781%), after which it slid to 2.728% at the close to appreciate 3.4 basis points (0.034 percentage point) compared to September 24th.

The yield on Japan’s 10-year government bonds climbed as high as 0.338% on September 25th, or the highest level since September 18th (0.371%), after which it slipped to 0.329% at the close to lose 0.004 percentage point on a daily basis, while marking a fourth consecutive trading day of decrease.

The spread between 10-year Australian and 10-year Japanese bond yields expanded to 2.399% on September 25th from 2.361% during the prior day. The September 25th yield difference has been the largest one since September 18th, when the spread was 2.402%.

Daily and Weekly Pivot Levels

By employing the traditional calculation method, the Monday pivot levels for AUD/JPY are presented as follows:

Central Pivot Point – 84.52
R1 – 85.23
R2 – 85.77
R3 – 86.48

S1 – 83.98
S2 – 83.27
S3 – 82.73

By using the traditional method of calculation again, the weekly pivot levels for AUD/JPY are presented as follows:

Central Pivot Point – 84.70
R1 – 86.44
R2 – 88.19
R3 – 89.93

S1 – 82.95
S2 – 81.21
S3 – 79.46