- AUD/JPY drops after Australia’s housing, current account data.
- Aussie New Home Sales, Building Permits flash mixed signals whereas Current Account Balance shrinks.
- RBA decision, G7 call will be important to portray near-term trade direction.
In contrast to Monday’s recovery from multi-year low, AUD/JPY pulls back to 70.75 following the latest set of Aussie data during Tuesday’s Asian session. Traders are now more concerned with the RBA’s rate decision as well as the consolidated action to counter coronavirus (COVID-19) risk by the G7 policymakers.
Australia’s January month HIA New Home Sales rose to 5.7% versus 2.0% prior. However, the Building Permits shrank 15.3% MoM compared to the upwardly revised previous readouts of +3.9% as well as 1.0% forecast. Further, Current Account Balance for the fourth quarter (Q4) slipped below 2.3B expectations to 1B.
In addition to the mixed Aussie data, the pair traders might have also followed the recent comments from Japanese PM Abe to favor the Japanese yen. Japan’s PM Shinzo Abe said to have already compiled stimulus package and hence turned down the hopes of any such BOJ moves. Even so, traders will be keenly watching details of the G7 conference call around 12:00 GMT to check on the latest speculations of consolidates easing from the global leaders.
That said, the market’s trade sentiment remains mostly positive with the S&P 500 Futures and Japan’s NIKKEI flashing near 1.0% gains whereas the US 10-year treasury yields extend recoveries to 1.15% by the press time.
Ahead of the G7 call, traders will keep eyes on the RBA’s interest rate decision. Even if the central bank isn’t expected to alter its monetary policy, a bearish bias is likely to prevail in the rate statement. Additionally, some of the key analysts have recently changed their calls and now anticipate a rate cut from the Aussie central bank. As a result, today’s RBA will be important to watch.
Technical Analysis
Unless breaking October 2019 lows near 71.75, odds of the pair’s further weakness to sub-70.00 area can’t be ruled out.
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