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  • AUD/JPY snaps five-day winning streak while extending pullback from 77.87 after activity numbers from Beijing.
  • China’s NBS Manufacturing PMI rose past-48.7 expected to 51.00, Non-Manufacturing PMI crossed 52.1 market consensus with 55.2 in August.
  • Market sentiment stays positive, S&P 500 refreshes record top above 3,500.
  • Calls of Aussie tax cuts, mixed data from Japan keep buyers hopeful.

AUD/JPY keeps the early-Asian weakness while declining to 77.42 amid Monday’s trading. The pair recently ignored better than anticipated activity numbers from Australia’s largest customer China.

Traders might have concentrated the previous readings of China’s August month NBS Manufacturing PMI of 51.1 while extending their short-term bearish bias. It should be noted that Australia’s TD Securities Inflation also got released at the same time and added downside pressure on the pair while slipping below 0.9% to 0.1% MoM during the current month. The latest news suggesting China’s initiation of an anti-subsidy investigation on some wine imports from Australia also weighs on the pair. Though, comments from the Australian Industrial Group (AiG) CEO Innex Willox, asking to extend the tax cuts, question the sellers.

Earlier in the day, Japan’s preliminary Industrial Production rose heavily past-1.2% forecast and 1.9% prior to print 8.0% mark on MoM. Though, the yearly figures were disappointing when flashing 16.1% contraction against -15.7% expected. Further, Retail Sales dropped 3.3% on MoM and 2.8% on YoY versus 8.0% and 2.4% respective forecasts.

Talking about the risk, global markets remain optimistic following the Fed Chair announced favor for easy money during the last week. The risk-on mood gained additional strength from the coronavirus (COVID-19) vaccine hopes and the recent chatter concerning the Aussie industries’ push for rolling over tax cuts. Receding virus cases from the epicenter Victoria, 73 be the latest numbers, adds to the upbeat sentiment. On the contrary, uncertainty surrounding the US stimulus and who will lead Japan after PM Shinzo Abe’s resignation joins the Sino-American tussle to challenge the positive outlook.

Against this backdrop, S&P 500 Futures rise 0.55% to refresh the record top above 3,500, currently around 3,523, whereas the US 10-year Treasury yields also stay positive around 0.73% by the press time. It’s worth mentioning that Japan’s Nikkei 225 gains 1.8% to 23,300 while Australia’s ASX 200 also adds 0.16% to 6,083.

Moving on, Australia’s Private Sector Credit will precede second-tier housing and consumer confidence figures from Japan to entertain short-term traders in Asia. However, major attention will be given to risk catalysts for a clear direction.

Technical analysis

Although sustained break of the early 2019 lows keeps the bulls hopeful, nearly overbought conditions of RSI flashes the red signals for the pair’s further upside. Also challenging the optimists is the 200-week EMA, currently around 78.40.

Read: AUD/JPY Price Analysis: Bumpy road for the bulls?

 

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