- AUD/JPY is currently trading near 78.75 during early Asian session on Thursday.
- The pair witnessed pullback as risk-on grew market attention ahead of China data, trade and Brexit progress.
- Inverse head and shoulders on H1 highlights 79.00 as a strong resistance with 78.30 and 78.00 be nearby supports to watch.
The AUD/JPY pair traders near 78.75 on early Thursday morning in Asia. Traders remain cautious trimmed bets favoring the Australian Dollar (AUD) ahead of China’s headline data release. Also adding to the concern was comments from the US secretary of state Mike Pompeo that criticize China. While China data and developments surrounding the US-China trade deal would be given high importance, Brexit progress could also affect the pair moves as being crucial for safe-havens like the Japanese Yen (JPY).
Doubts over the strength of Australia’s largest economy, China, coupled with risk-on sentiment during day-start trading dragged AUD/JPY back from 79.00. Forecasts suggest this year’s first batch of major Chinese data could keep portraying soft fundamentals. Industrial production (YoY) is expected to decline to 5.5% from 5.7% and the retail sales growth might weaken by 8.1% versus 8.2% earlier on a yearly basis.
Traders also gave importance to the Brexit drama during early Asian sessions. The UK members of parliament (MPs) yesterday passed a bill to avoid leaving the EU without any trade deal. However, the sentiment turned sour afterward as the British PM Theresa May said she doesn’t have a new proposal to suggest after both of her earlier plans were rejected in the parliament. On the other hand, some of the politicians came forward and said they won’t back PM May’s even if it appears for third voting round. As a result, uncertainties surrounding how the UK could exit the EU portrayed risk-safety ahead of the voting on whether Article 50 deadline March 29 should be delayed or not.
Elsewhere, the US secretary of state Mike Pompeo was reported saying by the Guardian that China is a human rights violator. Such statements from the topline US lawmakers indicate not all is going well at the on-going trade discussions between the US and China.
AUD/JPY Technical Analysis
Inverse head and shoulders formation on H1 highlights the importance of 79.00 neckline, a break of which can propel the quote towards 79.70 and 80.00.
On the downside, 78.30, 78.00 and 77.70 can confine the pair’s immediate declines.
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