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  • AUD/JPY snaps three-day winning streak while receding from 76.44.
  • Uncertainty surrounding US stimulus increases, Aussie government extends the JobKeeper program fund.
  • Economic forecasts will be the key for RBA MPS, China trade data to linger as well.
  • The American aid package, employment data and virus headlines keep the driver’s seat.

AUD/JPY portrays the market conditions best by marking a sluggish move near 76.30 before Tokyo opens on Friday. The quote surged to the highest since late-June during this three-day run-up that ended the previous day. Other than the pre-NFP trading lull, coronavirus (COVID-19) woes and US lawmakers’ inability to agree over the much-needed stimulus package dragged the quote off-late.

Australian Treasurer Josh Frydenberg announced the addition of $15.6 billion into the government’s JobKeeper program during the early-day. “Treasurer Josh Frydenberg has announced changes to the program, taking the total cost to $101 billion, making it the most expensive program the Federal Government has ever funded,” said ABC News. The Aussie diplomat cited virus worries in Victoria to be the reason behind availing over $13.00 billion of the fresh stimulus to the troubled state.

Elsewhere, the US Senate Republican Leader Mitch McConnell announced adjournment of the House for the week while canceling the August vacation. The lawmakers will resume discussion over the stimulus package on Monday 03:00 PM EDT. However, US President Donald Trump showed readiness to use executive orders to play his role in determining unemployment claim benefits.

It should also be noted that the recent trade war signals between the US and Canada, after America recalled Aluminium tariffs, joins the Beijing-Washington tussle to offer an extra burden on the pair.

Considering this, S&P 500 Futures dwindles around 3,340 despite Wall Street’s upbeat performance. Though, most markets in Asia are yet to open and hence portray a little inactivity as of now.

Looking forward, RBA’s Monetary Policy Statement (MPS) will be the key immediate event ahead of China’s July month trade numbers. The RBA MPS are likely to repeat the dovish statements mostly ignored by the Aussie bulls earlier. However, anticipated weakness in the economic forecasts could challenge the optimists. Further, China’s trade balance is expected to recede from $46.42B to $42B and hence may add reasons for the buyers to be cautious.

Additionally, traders will be all eyed on the US employment data that is likely to offer further strength in the market’s rush for risk-safety, which in turn could fuel Gold, equities and Australia dollar off-late. However, any positive surprises from US President Trump could help the market to reconsider US dollar buying.

Read: Nonfarm Payrolls Preview: Hints point to an awful July

Technical analysis

While failures to cross 77.00 favor the sellers to take the risk of targeting 75.90, an ascending trend line from June 12, at 75.30 now, could restrict the pair’s further weakness.