AUD/JPY consolidates gains above 69.00 ahead of China data
- AUD/JPY retraces the previous day’s gains above 69.00.
- Mixed catalysts for risks, BOJ comments beat Aussie jobs report.
- Japan PPI, China Industrial Production, Retail Sales can offer immediate direction.
- Trade/virus updates will also be the key.
AUD/JPY steps back from the previous day’s top of 69.40 to 69.30, following its recoveries from 68.55, during the early Friday morning in Asia. Despite the broad risk-off sentiment, the Japanese yen’s pullback, amid BOJ comments, seems to have contributed to the pair’s recovery moves. Though, the recent updates from the US are likely to renew the downside pressure.
BOJ’s Kuroda stays ready to ease, if needed, but not via rate cut…
BOJ Governor Haruhiko Kuroda flashed mixed signals the previous day. While the central banker stood ready to ease monetary policy further, if needed, he ruled out the need to cut interest rates further, at the moment.
Considering the risks, US President Donald Trump keeps being tough against China and recently got the power to sanction Chinese officials involved in the Xinjiang case. The Republican leader is also to some more powers to sanction the dragon nation if the bill gets passed that enables him to punish China in case it doesn’t comply with the virus outbreak investigation.
Additionally weighing on the risk-tone sentiment could be the fears of the second wave of the coronavirus (COVID-19) spread as well as the fierce fight between Australia and China after the Aussie PM pushed for investigation on virus spread.
It’s worth mentioning that the Aussie dollar gained against the yen despite downbeat employment data as well as worrisome comments from the Australian PM and Treasurer.
Amid all these catalysts, Wall Street managed to flash a positive closing whereas the US 10-year Treasury yields post losses to 0.617%.
Moving on, China's data will be the key for all the Aussie pairs, including the AUD/JPY, considering the dragon nation’s state as the largest customer to Australia. In this regard, TD Securities said, “The move back into expansion territory for the manufacturing PMI in March and April points to a small increase in industrial production in April though we continue to think any recovery is tentative given the likely increase in demand-side pressures. We expect a 3.5% y/y increase in IP. Retail sales are likely to continue to remain soft given the cautious approach of the authorities to re-opening though the pace of decline is likely to less compared to last month. Consumer related activities are likely to remain under some pressure overall.”
Technical analysis
While 50-day and 100-day EMAs limit the pair’s near-term moves between 68.90 and 70.10 respectively, an ascending trend line from April 02, at 68.40 now, keeps the buyers hopeful.