FX Daily Strategy: Asia, Aug 19

The Australian wage growth will be closely watched as market participants gauge from there their expectation of the next RBA rate hike. We are not seeing a significant deviation from consensus as wage grwoth should steady above 3% for Q2. The Australian labor market remain healthy from the second round of Middle East energy spike, thus the trajectory of wage is unlikely to be derailed.

On the chart, the break above resistance at .7080/.7100 see prices extending the bullish gains from the .6865 June low to reach the .7120 Fibonacci level before settling back in consolidation. Bullish price action keep pressure firmly on the upside and higher will see room for extension to .7150/.7200 congestion area. Break here will return focus to the May current year high at .7278. Meanwhile, support is raised to the .7100 level. Below here will give way to consolidation to unwind overbought daily studies and see room to .7050 congestion and .7025 support.

Consolidation see prices extending choppy trade at the 159.50 congestion but pressure remains on the upside and see scope for break to extend bullish gains from the 155.22, 3 August low. Higher will see room for extension to the 160.00 figure and strong resistance at the 160.50 congestion and March high. Meanwhile, support remains at the 158.50/158.00 congestion area. Would take break here to return focus to the downside and see pullback to retest of support at the 157.00/156.65 congestion and 7 August low.

However, the pair is testing higher grounds despite recent consolidation. Without an official commitment from the BoJ, the September hike remains a rumor and is unlikely to further support the JPY. The last thing to keep speculators in check would be the risk of joint intervention. Looking forward, it seems the test for higher ground is inevitable yet the correction maybe steep.