AUD/JPY recovers from multi-month low after Aussie data

• AUD/JPY bounces off fresh 7-month as Australia’s Retail Sales beat forecasts.
• Retail Sales follows upbeat inflation readings, published previously, in turn raising doubts over the RBA’s future rate cut.
• Absence of major data highlights trade/political fears for fresh direction.

Following Australia’s Retail Sales growth beating forecasts, the AUD/JPY pair recovered from multi-month lows to 72.80 during Friday morning in Asia.

The seasonally adjusted Retail Sales (MoM) for June grew past 0.3% market consensus to 0.4%. Additionally, the second quarter (Q2) Producer Price Index (PPI) data was also released side-by-side that carriers a bit less importance for the Forex market. The Q2 PPI crossed 0.3% forecast to 0.4% on a QoQ basis while beating no change expectations of 1.9% with 2.0% mark on a yearly format.

While recent improvement in retail sales joins earlier published inflation rise, odds are increasing for the Reserve Bank of Australia (RBA) to rethink over further rate cuts.

Be it the US President’s surprise announcement of Chinese tariffs or North Korean missile-test, not to forget market’s worry ahead of the key US employment data, everything could be considered responsible for the quote’s slump to seven-month low during the initial trading session.

The US President Donald Trump isn’t backing down after announcing the 10% tariffs on remaining $300 billion worth of goods from China as he recently said in a rally in Cincinnati that “We will be taxing the hell out of China”.

With the traders’ rush for safe-havens, that currently propels the Japanese Yen (JPY), the US treasury yields continue to slump towards multi-month low. The 10-year note offers 1.88% by the press time.

Considering no big data from either Australia or Japan left for publishing, investors will keep an eye over trade/political news for fresh impulse.

Technical Analysis

Pair’s sustained decline below a downward-sloping trend-line since January 10, at 72.90 now, can keep pushing bears towards June 2016 bottom surrounding 72.40 and current year low of 70.71. On the contrary, an upside clearance beyond 72.90, needs validation from 73.00 round-figure to target 23.6% Fibonacci retracement of December 2018 to January 2019 downpour, at 73.83, followed by June month low of 73.92.