AUD/JPY bulls in control, awaiting next major catalyst

• AUD/JPY higher on improved risk sentiment, but headlines are fickle.
• Eyes on NFP, August ADP report was quite a bit stronger than expected.

AUD/JPY is holding up in a risk-on environment as markets get set for key US economic data on Friday which could be the nail in the coffin for the yen. AUD/JPY is currently trading at 72.91, up from the depths of the 72 handle.  

AUD/JPY is better bid following a series of positive news with respect to trade, hong Kong and Brexit, weighing on the yen which has been underperforming for the entire week.  Markets are looking to tomorrow’s US Nonfarm Payrolls data as the next potential catalyst to send the Yen over the edge while, with direct respect to the Aussie, we will have to wait and see what domestic economic data can do to support a continuation of the upside, while otherwise, with geopolitical as fickle as it has been, any recovery could well be shortlived considering how the RBA  is on standby, will to act to a weaker labour market and deteriorating global backdrop – Observers are expecting the next cut in the OCR to come as soon as October.

All eyes turn to NFP

As a prelude to the jobs data today, overnight, the August ADP report was quite a bit stronger than expected:

“Private payrolls rose 195k vs 142k in July (156k). The data supplemented the initial claims data for the NFP survey week and suggest a solid non-farm payrolls number tomorrow – the median expectation is 160k. The data imply the labour market, particularly service-producing jobs (+184k), is weathering the tariffs well. Without a downturn in private service-sector jobs in the US, history shows that a recession is very unlikely,”

analysts at ANZ Bank explained.

AUD/JPY levels