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  • AUD/JPY dips on US-China trade tensions.  
  • A deal on farm products looms as next contentious issue.  

AUD/JPY slipped below support at 75.29 earlier today and hit a low of 75.18, as the Japanese Yen picked up a bid, possibly on reports that the US and China are yet to reach a consensus on Chinese imports of US farm goods.  

A deal on agricultural products seems to have emerged as a contentious issue ahead of the new round of trade talks between the two nations.  

President Trump emerged from a June meeting with his Chinese counterpart Xi, saying that China would immediately increase purchases of American farm products in return for a trade truce.  

China, however, did not make any explicit commitment and has called for resolution of the issue based on a foundation of equality and mutual respect.  With the issue of farm products casting doubt over the upcoming face-to-face  negotiations, the AUD/JPY pair, a global risk barometer, has come under pressure.  

Moreover, both the AUD and JPY have picked up a bid against the US Dollar in response to a dovish testimony by the US Federal Reserve President Jerome Powell.  

Trade concerns, however, are likely helping the JPY outperform the AUD. As of writing, the AUD/JPY pair is trading at 75.27,representing a 0.32% drop on the day.  

Australian data released earlier today did little to strengthen the bid tone around the AUD. Australia’s Consumer Inflation Expectations (Jul) came in at 3.2% vs 3.3% in June.  

Home Loans (May) growth stalled, missing the expected print of -0.6%, having dropped 0.9% in the preceding month.  

Pivot levels