A series of Australian monetary policy and labour-market indicators will be released next week. The RBA's minutes are due on the 17th, the July-September WPI on the 18th and October employment data on the 19th, putting wage trends and employment conditions in focus. We also review the outlook for AUD/JPY and NZD/JPY next week, together with the relevant technical levels.
AUD/JPY traded around ¥108.68 this week, while NZD/JPY was around ¥88.10. With no leading indicators released, overseas factors were the main influence. The yen came under selling pressure when the US dollar was bought on rising expectations of Fed rate hikes, while directionless trading continued. The ranges remained limited to around ¥108.49-¥109.56 for AUD/JPY and ¥87.91-¥89.22 for NZD/JPY.
Next week will bring a series of releases related to Australian monetary policy and the labour market: the Reserve Bank of Australia's (RBA) minutes on the 17th, Australia's July-September wage index (WPI) on the 18th and October employment data on the 19th. The RBA raised interest rates to 4.85% on the 3rd, but some remarks also emphasised its stance of keeping rates unchanged, and it is expected to continue carefully assessing whether further rate hikes are warranted.
The market expects the wage index to rise 3.4% year on year, accelerating from 3.2% in the April-June quarter. Strong wage growth could raise concerns about inflationary pressure and revive expectations of additional rate hikes, while a weak figure could strengthen the view that the RBA's rate-hike cycle has ended. Remarks by the RBA governor and the contents of the monetary policy report will also be closely watched as factors in future decisions.
AUD/JPY fell below the 15 October low of ¥108.64. Going forward, the area around ¥107.69 is likely to be watched as a downside target, with ¥106.08 potentially becoming the next target. On the upside, the daily conversion line, base line and cloud are likely to serve as targets. Next week's forecast ranges are 106.500-110.500 for AUD/JPY and 86.500-89.500 for NZD/JPY.
Events in the week of 16 November include China's retail sales and industrial production, the release of the RBA's minutes, New Zealand's PPI, Australia's wage index and employment data, and New Zealand's trade balance. Labour-market and wage trends in Australia and New Zealand are expected to attract investors' attention.