China’s recent stock market meltdown could be the result of underlying economic weakness that would have serious repercussions for exporting nations, including Australia. On the economic front, a report released by the Conference Board showed that its leading economic index for Australia rose 0.2% month-over-month in May, reversing the 0.3% drop in April.
Japan’s central bank last week cut its annual growth and inflation forecasts for the world’s third-largest economy. After a two-day policy meeting, the Bank of Japan (BoJ) said Japan’s economy would expand 1.7% in the fiscal year to March 2016 while inflation would come in at 0.7%. This continues to reflect a more optimistic view than the private sector.
The AUDJPY fell 6.03% since the start of the Year and is still in bearish phase. The currency tried to rally last week but found enough selling pressure at previous week high giving most of its gains back and closed in the green near the open of the week. The 200-week moving average is in control of the price movement for now although the stochastic is showing a strong bearish momentum and is below the 50 mid line.
Expecting an upward move to a weekly key level at 94.575 (scenario 1) or even a move up to a weekly resistance at 97.17 (scenario 2) on a break above previous week high at 94.43.