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  • AUD/JPY drops to the session lows after the US Senate approves a bill that supports protestors in Hong Kong.
  • A downward revision to Australia’s Westpac Leading Index and sluggish trade hopes add to the pair’s weakness.
  • Mixed numbers of Japan’s trade were largely ignored.

Given the US Senate’s latest bill on Hong Kong, coupled with the below-trend AU Westpac Leading Index, weighing on the AUD/JPY pair, the quote trades near 74.00 during Wednesday’s Asian session.

The Bloomberg news that the United States (US) Senate unanimously passed a bill aimed at supporting protesters in Hong Kong seems to have recently fueled the market’s risk-off moves. The bill is sent to the House of Representatives for approval and if passed will warn China against a violent suppression of the demonstrations. This indicates further hardships for the US-China trade negotiators who are jostling over the phase one talks with the concerns over tariff rollback acting as the latest roadblock.

On the other hand, Australia’s Westpac Leading Index for October rose past downwardly revised -0.12% to -0.07%. However, the Westpac report published after the release says, “the Leading Index growth rate remains materially below trend and continues to point to weak economic momentum carrying well into 2020.”

Also occupying the economic calendar were Japan’s trade numbers for October. The headlines Trade Balance weakened below ¥301 B forecast to ¥17.3 B while Imports recovered to -14.8% versus -16% expected but Exports slipped to -9.2% against -7.6% market consensus.

With this, the US 10-year Treasury yields remain under pressure around 1.77% while the S&P 500 Futures lose -0.13% to 3,112 by the press time.

Considering the lack of major statistics/events on the economic calendar, traders will keep eyes on headlines concerning the US-China trade relations and Hong Kong for fresh impulse.

Technical Analysis

21-day Exponential Moving Average (EMA) near 74.30 acts as an immediate upside barrier ahead of early-month low near 74.60. On the contrary, 73.40/35, comprising the monthly bottom, could keep checking sellers.