18.07.201907:41 Forex Analysis & Reviews: Analysis of AUD/JPY for July 18, 2019: AUD to gain momentum despite worse employment change

The Australian dollar started the week with weak economic reports and events which. Today the aussie extended losses as the employment change report moved drastically below the expected value.

Today the Australian employment change report was published with a decrease to 0.5K from the previous figure of 45.3K which was expected to be at 9.1K. At the same time, the unemployment rate remained unchanged at 5.2% as expected. The Australian Bureau of Statistics reported about creation of 500,000 new jobs last month as a slump in part-time work overshadowed a 21,100 jump in full-time employment. However, the overall employment change statistics were downbeat which put the market into indecision. The RBA has recently estimated that the jobless rate will need to fall to 4.5% to generate any wage pressures. In order to achieve that level, it chopped interest rates twice since June to a record low of 1% as the economy grapples with subdued home prices and miserly consumer spending.

Another rate cut is expected later this year, most probably by November while some are predicting the key rate at 0.5% in 2020 as the RBA steps up efforts to revive growth in Australia's A$1.9 trillion economy which has slowed to decade lows.

On the other hand, Bank of Japan Governor Haruhiko Kuroda has recently stated that the central bank will debate monetary policy this month based on the view that Japan's economy continues to grow moderately. The overall expectations of the further monetary policy easing by the BOJ has risen as the US Federal Reserve looks set to cut interest rates this month for the first time in over a decade. Japan's economy is expected to expand 0.5% in the fiscal year to March 2020, while contracting an annualized 1.8% in the fourth quarter when growth is dented by a scheduled sales tax hike in October. It is projected to grow at the same rate of 0.5% in the next fiscal year.

Today Japan's trade balance report was published with an increase to -0.01T from the previous figure of -0.62T which was expected to be at -0.14T. Tomorrow the national core CPI report will be published which is expected to decrease to 0.6% from the previous value of 0.8%, Ahead of it, JPY has managed to regain certain momentum over AUD already but how long it is going to last is still questionable.

TECHNICAL OVERVIEW:

The price is currently residing above a strong event level of 75.50 area which has been rejected earlier for several times and a break above 75.80 will indicate further upward thrust with the targets towards 77.50 and later towards 80.00 resistance area in the future. After the price formed the Bullish Divergence, pushing below 75.50, it managed to attract certain buyers to push the price upward. A break above 75.80 will confirm further upward momentum in the process.