- AUD/JPY takes the bids after PBOC announced no change in benchmark rates.
- Market’s risk-tone remains mixed amid US-China, Aussie-Sino tussles.
- Japan’s Machinery Orders, Reuters Tankan Business Sentiment add to uncertainty.
- BOJ remains supportive to further easing, defies negative rates like other peers.
People’s Bank of China’s (PBOC) offering an additional boost to the AUD/JPY pair’s previous recoveries, the quote takes the bids near 70.71 amid the initial trading on Wednesday.
Read: Unchanged: China sets 5-year loan prime rate at 4.65% vs 4.65% a month earlier
While the PBOC’s move offered immediate upside to the pair, mixed catalysts confused traders when it comes to the risks.
It should also be noted that Australia’s Preliminary April Sales registered the strongest fall on record while slumping to 17.9% MoM.
There has been confusion with the recent tension between the US and China as well as the Aussie-Sino tussle. While the White House Adviser Larry Kudlow suggested the US President is still not tearing trade deal with China, Bloomberg said that US Republicans demand testimony of WHO Director, Chinese Ambassador in virus outbreak investigation.
On the other hand, S&P Global Platts anticipates no threat for Australia’s LNG (Liquefied Natural Gas) exports to the dragon nation despite China’s recent punitive measures against the Scott Morrison and company. Following the last week’s ban on four Aussie meat producers, the Asian major levied 80% tariffs on Australia’s barley on Tuesday. Also increasing the fears were the Bloomberg report citing further Aussie exports of wine, seafood, oatmeal, fruit and dairy.
Amid all these catalysts, the US 10-year Treasury yields drop 1.5 basis points to 0.696% whereas Japan’s NIKKEI flashes 0.55% gains, opposed to 0.40% loss by Australia’s ASX 200, by the time of writing.
Earlier during the day, Japans Machinery Orders for March defied market consensus of -7.1% and -9.5% MoM and YoY figures respectively with -0.4% and -0.7% marks in that orders. However, Reuters report on monthly Tankan Surveys for May suggested that the Manufacturers index dropped to the lowest level since June 2009 whereas that of non-manufacturers also revisited December 2009 bottom with -44 and -33 numbers respectively.
Looking forward, traders may have to take an extra not of the qualitative catalysts affecting the risks amid a light calendar in Asia.
Technical analysis
Buyers seek a daily closing beyond 100d-ay SMA level, at 70.55 now, to challenge March top nearing 71.52. On the contrary, the pair’s declines below the early-month high surrounding 70.18 can trigger fresh declines to a fortnight-long support line, currently around 69.00.
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