Forex Market: AUD/JPY trading forecast for October 26th

Friday’s trade saw AUD/JPY within the range of 86.87-88.14. The pair closed at 87.64, soaring 0.76% on a daily basis, or at the most considerable rate since October 9th, when it appreciated 1.32%. The daily high has been the highest level since October 13th, when the cross registered a high of 88.43. In weekly terms, AUD/JPY went up 1.05% last week, following a 1.70% slump in the week ended on October 18th.

No relevant macroeconomic reports and other events, which may influence AUD/JPY trading, are scheduled on Monday (October 26th).

Correlation with Major Pairs

Taking into account the week ended on October 25th 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 USD/JPY (0.8587, or very strong)
AUD/JPY to USD/CHF (0.7708, or strong)
AUD/JPY to USD/CAD (0.3208, or moderate)
AUD/JPY to NZD/USD (0.1654, or weak)
AUD/JPY to AUD/USD (-0.1651, or weak)
AUD/JPY to EUR/USD (-0.8175, or very strong)
AUD/JPY to GBP/USD (-0.8375, or very strong)

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

2. AUD/JPY moved strongly in one and the same direction with USD/CHF during the past week.

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

Bond Yields

The yield on Australia’s 2-year government bonds went as high as 1.814% on October 23rd, after which it slid to 1.798% at the close to lose 1.3 basis points (0.013 percentage point) compared to October 22nd. It has been the second straight trading day of decrease.

The yield on Japans 2-year government bonds climbed as high as 0.020% on October 23rd, or the highest level since October 1st (0.021%), after which it closed at the exact same level to gain 0.003 percentage point compared to October 22nd. It has been the seventh increase in the past ten trading days.

Meanwhile, the yield on Australia’s 10-year government bonds soared as high as 2.687% on October 23rd, or the highest level since October 20th (2.702%), after which it slid to 2.668% at the close to add 5 basis points (0.05 percentage point) compared to October 22nd. It has been the first increase in the past three trading days.

The yield on Japans 10-year government bonds climbed as high as 0.320% on October 23rd, or matching the high from the previous trading day, after which it slipped to 0.313% at the close to lose 0.007 percentage point compared to October 22nd. It has been the fifth decline in the past ten trading days.

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 – 87.55
R1 – 88.23
R2 – 88.82
R3 – 89.50

S1 – 86.96
S2 – 86.28
S3 – 85.69

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

Central Pivot Point – 87.24
R1 – 88.54
R2 – 89.44
R3 – 90.74

S1 – 86.34
S2 – 85.04
S3 – 84.14