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  • AUD/JPY rises to one-week high before stepping back even as Australia’s Q4 CPI jumps above market forecasts.
  • Aussie Westpac Leading Index eased below 0.7% prior in December, NAB Business Confidence dropped as well.
  • Market sentiment seesaws on mixed data, vaccine hopes and IMF’s upward revision to global economic growth.
  • Pre-Fed sentiment can probe the traders but risk catalysts may offer intermediate moves.

AUD/JPY drops to 80.35, following the recent jump to refresh weekly top with 80.44 level, during Wednesday’s Asian session. The pair initially responded to Australia’s better-than-forecast Consumer Price Index (CPI) data for the fourth quarter (Q4) but soft Business Confidence from the National Australia Bank (NAB), following Westpac Leading Index, probed the upside momentum.

Australia’s Q4 CPI rose past-0.7% forecast to 0.9% QoQ while the YoY figures jumped above 0.7% expected to 0.9%. However, the RBA Trimmed Mean CPI marched market consensus of 0.4% QoQ and 1.2% YoY.

Read: Aussie Q4 CPI beats estimates, AUD/USD bid to fresh impulse highs

It should be noted that NAB’s Business Confidence for December dropped below prior 13 to 4 whereas Business Conditions improved to 14 versus 7 prior. Earlier in the day, Westpac Leading Index for December also dropped from 0.7% MoM to 0.12%.

Not only have the mixed data from Australia but uncertainty over the US fiscal stimulus and the US-China tussle also probed the previous day’s risk-on mood. US President Joe Biden’s race to complete his election promises on vaccinations and clean energy seems to have recently pleased the market optimists. Though, chatters over Janet Yellen’s dislike for China and joining hands with the Fed to direct the economy as a US Treasury Secretary seem to have weighed on sentiment.

On Tuesday, the International Monetary Fund’s (IMF) upward revision to the global economic growth forecasts for 2021 and welcome news from the key vaccine producers like AstraZeneca, Moderna and Pfizer seemed to have favored the risks.

Against this backdrop, S&P 500 Futures struggle to keep the latest bids around 3,850 while stocks in Asia-Pacific trade mixed with Australia’s ASX 200 down 0.70% by press time.

Moving on, the AUD/JPY traders will keep their eyes on the risk catalysts for intermediate direction while waiting for the US Federal Reserve’s first announcement of 2021.

Read: Fed Preview: Fearing market froth or boosting Biden’s stimulus? Three scenarios

Technical analysis

A clear break of the two-week-old falling trend line directs AUD/JPY buyers toward the 81.00 round-figure. During the rise, the monthly peak close to 80.90 can offer breathing space to the bulls.