National Australia Bank (NAB) Business Confidence
In the first hours of the day, at GMT 1:30 a.m., the National Australia Bank Limited (NAB) released its Business Confidence figure, which is a diffusion index level developed by surveying businesses. However, the NAB Business Confidence figure excludes the farming industry and focuses solely on the non-farm sectors.
Analysts consider the NAB Business Confidence to be a leading indicator of the Australian economy as the business sector usually has the latest idea about the economic situation based on their sales. Last month, the NAB Business Confidence index came out at 8 and this month it came out at 11, indicating an improving business condition.
The improved business confidence level was taken as a positive news for the Australian economy and the AUD/JPY climbed 22 points as a result during the first hour of the release from NAB.
Japanese Industrial Production
The Japanese Ministry of Economy, Trade and Industry (METI) released the month-over-month Industrial Production figure at GMT 4:30 a.m., which measures the changes in the total output value of all manufacturers, miners and utility service providers after adjusting inflation for the period. Last month, Japan’s Industrial Production decreased by 3.3%, and this month the forecast was set at a 0.5% growth. In contrast, the actual figure confirmed that the Japanese Industrial Production has actually gone down by 3.4% during the past month.
Since the Industrial Production reacts swiftly to the country’s business cycle, analysts consider this data to be a leading indicator for the overall economic health. A worse than expected Japanese Industrial Production data was certainly a Yen negative event, and it has set a bullish market sentiment for the AUD/JPY.
Trade Recommendation for the AUD/JPY
The AUD/JPY has rebounded on August 8, after finding support around the 94.0 level. Since then, the pair has formed an upward sloping trend line on the hourly time frame. Yesterday, the AUD/JPY price found support around the trend line at the 94.60 level. Within an hour the Australian NAB Business Confidence data was released and the AUD/JPY spiked up, closed above the 94.70 level, which is a short-term resistance level.
The fundamental data suggest a bullish momentum in the AUD/JPY. If the pair can close above the 94.90 level, it will certainly attract more long-positions. In that situation, it indicates a potential CALL in the AUD/JPY.
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About our Forex Analyst: Asif Imtiaz
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