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  • AUD/JPY extends pullback from April top, flashed last-week, to a fortnight low.
  • Trump administration attacks China over multiple issues, fears of trade/political war back in motion.
  • Tokyo opens for the first time this week.
  • Australia/China trade figures, US-China headlines and virus updates are the key.

With the US-China tussle back in focus, AUD/JPY remains depressed near multi-day low, around 67.93, at the start of Thursday’s Asian session. The risk barometer earlier dropped to a fortnight low of 67.86 by the end of Wednesday’s US session.

US keeps China on gunpoint…

Be it US President Donald Trump’s trade warning or the White House statement expressing “frustration and disappointment” over the US-China relation, everything suggests that the global trade leaders aren’t in cordial relations.

Also portraying the deteriorating relations between the US and China are comments from the US Secretary of State Mike Pompeo indicating Trump administration’s interest in Hong Kong, which China doesn’t like. The US Diplomat recently said, that his State Department is delaying a report to Congress assessing whether Hong Kong enjoys sufficient autonomy from China to continue receiving special treatment from the United States. On Wednesday, China’s Hong Kong affair office said that China’s central government will ensure “one country, two systems” principle maintained.

Amid all these catalysts, Wall Street ended Wednesday in a mixed tone while defying the early-day risk-recovery.

Moving on, the return of the Japanese traders will be the key after multiple holidays. Even if no major data is up for publishing from Japan, Tokyo’s reaction to the risk catalysts will be the key.

Additionally, trade numbers from Australia and China, for March and April respectively, will also be the key for the pair. While forecasts suggest upbeat figures for Aussie data, weakness in Chinese figures could weigh on the pair.

Other than the trade headlines and data, virus updates will also be the key as global leaders head to the economic restart after many days of lockdown.

Technical analysis

While a sustained break of 21-day SMA for the first time in a month keeps the bears directed towards April 21 low surrounding 67.30, a 50-day SMA level of 67.60 can offer intermediate halt during the fall.