AUD/JPY flashes fresh 3-week low after AU employment, Japanese GDP

• AUD/JPY losses more than 30 pips after Australian employment change surprised markets.
• Traders earlier ignored Japan’s mildly soft GDP amid trade/political tension.
• Trade headlines, China’s data dump will be the key to watch for now.

While the US-China trade stalemate was already exerting downside pressure on the AUD/JPY pair, a surprise negative reading of Australian employment change figure drags the quote down to 74.00 by the press time of Thursday’s Asian session.

Australia’s October month seasonally adjusted Employment Change dropped below 15K forecast and a revised 12.5K prior to -19K. Also exerting downside pressure on the prices is an Unemployment rate of 5.3%, versus 5.3% forecast and 5.2% prior, Full-Time Employment Change to -10.3K from 24.9K (revised) and 66.00% Participation Rate against 66.1% expected and previous.

Previously, the preliminary reading of Japan’s third-quarter (Q3) Gross Domestic Product (GDP) lagged behind 0.2% expectations and 0.3% previous to 0.1% on QoQ basis.

On the news front, risk sentiment is negatively affected due to the increasing tension between the United States (US) and China. Not only trade deadlock (as conveyed by the Wall Street Journal) but political rift concerning Taiwan, recently noted by China’s Global Times, also signals that the world’s top two economies will find it hard to reach the much-awaited phase one trade deal in December.

With this, the US 10-year treasury yields stay sluggish around 1.88% while S&P500 Futures decline near 0.11% by the time of writing.

Investors will now focus on China’s October month Retail Sales and Industrial Production, coupled with Japan’s September month Tertiary Industry Index, for immediate direction. However, overall market moves will be governed by trade/political headlines.

Technical Analysis

An upward sloping trend line since late-August, around 73.25 now, gains bears’ attention while 75.00 and 75.30 can entertain buyers during the pullback.