AUD/JPY: Off intraday top after Aussie trade numbers

• AUD/JPY fades upside momentum near 74.45 after downbeat Aussie trade numbers.
• Australia’s June month Trade Balance softened to 8,025M versus 9,000M forecast and 8,800M prior.
• Market sentiment carries the usual pre-NFP mood, virus updates, US-China tussle add filters.

AUD/JPY eases from the intraday high of 74.45 to 74.38 amid Wednesday’s Asian session. Australia’s trade figures for June become the latest catalysts for the pair’s U-turn. Also challenging the recent upside momentum could be the market’s grim mood ahead of the key US employment data. Furthermore, the Sino-American tension and fears of the worsening coronavirus (COVID-19) conditions in the US exert additional pressure on the pair.

Aussie Trade Balance stepped back from 9,000M forecast and 8,800M earlier readouts to 8,025M in June. Details suggest that the Exports shrank lesser than -11.3% previous to -4.0%. Further, Imports also recede in declines to -6.0% against -9.8% prior.

Read: Australia’s Trade Balance: AUD +8.025 bn (expected AUD +9bn), bearish for AUD

On the other hand, Japan’s June month Monetary Base rose from 3.9% earlier to 6.0% but Foreign Investment in Japan stocks for the period ending on June 26 dropped from ¥-421.9 B to ¥-494.4 B. Also, Foreign Bond Investment also recedes from ¥1547.5 B to ¥174.6 B during the mentioned period.

Talking about the risks, US virus cases surged the most since the pandemic started, as per Reuters, while marking a daily increase of over 48,000 on Wednesday. Alternatively, China announced measures to have an eye over the US media operating on their lands after Trump administration went a step farther in sanctioning Beijing over the Hong Kong Security law. Furthermore, market players doubt the upbeat expectations from the US employment figures for June considering the latest outbreak of the virus, which in turn becomes another challenge to the risk-tone.

While portraying the market mood, the US 10-year Treasury yields stop the previous run-up towards 0.70% around 0.68% by the press time. However, stock indices in Japan and Australia, namely Nikkei 225 and ASX 200, remain mildly positive.

Given the lack of major data/events left for publishing, the pre-NFP trading lull could bore analysts. Though, updates concerning the virus and Sino-American relations might offer intermediate entertainment.

Technical analysis

Having bounced off 21-day SMA, currently around 74.25, the quote again aims for the mid-June top near 75.10. Though, a clear break beyond Wednesday’s top of 74.70 becomes necessary to justify the strength of the upside momentum.