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  • AUD/JPY refrains from extending upside momentum despite mostly welcome December’s trade figures from Australia.
  • Headline Trade Balance grew, Exports reprint 3.0% while Imports dropped.
  • Market sentiment improves further as US Democrats got the votes to fast-track President Biden’s relief package.
  • Pre-NFP trading lull kicks in amid a light calendar, comments from Japan may offer intermediate moves.

AUD/JPY remains mildly bid around 80.15, up 0.14% intraday, amid Thursday’s Asian trading session. In doing so, the quote rises for the second consecutive day but seems hesitant in welcoming recent Aussie trade data and upbeat market mood due to increased odds of the US fiscal stimulus.

December’s Trade Balance from Australia grew past-5,022M figures to 6,785M whereas Exports again flash 3.0% rise. However, Imports dropped from +10.0% to -2.0% during the stated period.

Read: Australia Trade Balance for Dec AUD+6,785 mln vs 5022 prior, AUD firm

Not only does the AUD/JPY fails to respect the data but the risk barometer in Asia also refrains from respecting the upbeat news for US President Joe Biden’s $1.9 trillion covid relief package. The latest update suggests the House Democrats have the votes to push for the President’s stimulus despite lacking support from Republicans.

Earlier in the day, comments from the Federal Reserve official also favored the need for stimulus while US Treasury Secretary Janet Yellen highlighted the dire need for the aid package the previous day.

Multiple updates favoring vaccinations and further developments on trials joined welcome data from the US and Europe to back the market optimism on Wednesday. As a result, AUD/JPY traders could reverse the initial losses due to the RBA Governor Philip Lowe’s dovish comments. The reason for the pair’s upbeat performance could also be traced from virus woes in Japan that pressure policymakers towards another stimulus.

Amid these plays, S&P 500 Futures stay 0.11% up intraday but stocks in Australia and Japan drop 0.63% and 0.55% by press time.

Looking forward, a light calendar will need comments from Japan, relating to the likely moves to combat the virus, which have been crossing wires off-late, for fresh impulse. Though, the market’s cautious sentiment ahead of Friday’s US Nonfarm Payrolls for January can challenge further moves.

Technical analysis

21-day SMA guards immediate upside around 80.20, a break of which could propel the quote towards a downward sloping trend line from January 08, currently around 80.60. Meanwhile, the 80.00 round-figure and one-week long support line close to 79.70 may test the AUD/JPY bears.