AUD/JPY stays on the back foot after RBA Monetary Policy Statement

• AUD/JPY extends the previous day’s losses.
• RBA’s Lowe, Japan Economy Minister earlier cited fears of coronavirus.
• China’s trade numbers, Japan’s Leading Economic Index will be the keys to watch for now.

AUD/JPY remains under pressure during the Asian session on Friday. The pair recently failed to react to the RBA’s quarterly monetary policy statement. The reason could be traced from the comments by the RBA governor Philip Lowe and Japan’s economy minister, crossed wires before a few minutes.

The Reserve Bank of Australia (RBA) cites coronavirus fears to cut the near-term growth forecasts while also saying that the board has been discussing the case for further easing.

Read: Breaking: RBA’s Monetary Policy Statement said unemployment would have to be moving “materially higher” to warrant another cut in interest rates

Earlier during the day, the RBA Governor Philip Lowe testified that the negative rates are highly unlikely but kept the risk of coronavirus impact on the Australian economy.

Following that Japan’s economy minister Nishimura said that coronavirus outbreak is beginning to affect Japan’s regional economies.

Even so, the global markets are paying a little heed to the downbeat comments, also not following the optimistic ones, during the pre-NFP trade bleak. With this, the US 10-year treasury yields and S&P 500 Futures remain around 1.65% and 3,340 respectively.

While Japan’s economic index will be of importance, Chinese data preceding that will have a larger impact on the markets. “We expect a weaker reading for Chinese trade data in January, with a 15.6% y/y fall in imports and 18% y/y fall in exports likely due largely to base effects and seasonal factors. The timing of Lunar new year holidays will mean that it will not be possible to gauge too much from the data though it will still be seen as somewhat disappointing,” said TD securities ahead of the release.

Technical Analysis

100-day and 200-day SMAs limit the pair’s near-term upside around 74.35/40, which in turn increases the importance of the yearly low near 72.44 as the key rest-point.