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  • There was a pause to the downside in stocks overnight.
  • AUD/JPY is flat in the early Asian open after the cross-traded in a narrow range.
  • We have key data from Australia today in August retail sales ahead of NFP.

AUD/JPY is flat in the early Asian open after the cross-traded in a narrow range in consolidation overnight around 72 the figure following a sell-off in a continuation of 2018 downtrend. AUD/JPY is directly correlated to risk sentiment which makes a compelling case for the downside as the global economic backdrop continues to deteriorate. The Yen has been a star performer of late which US stocks got off to their worst fourth-quarter since the global financial  crisis.

There was a pause to the downside in stocks overnight as investors cash out ahead of the Nonfarm Payrolls data tonight. In the same vein, speculation that the Federal Reserve will indeed cut rates again later this month brings some solace to investors that the Fed will be coming to the rescue.  

It’s a huge day for the cross

It’s a huge day for the cross and markets considering the ISM data misses and the state of flux that markets find themselves. The major event will indeed be the Nonfarm Payrolls, expected to increase by 145k, broadly in line with the six month average of +150k. The unemployment rate is seen to hold at 3.7% while the annual pace of average hourly earnings continues to track at 3.2%yr. However, should there be a sizeable miss, one way or the other, the US Dollar will likely react in a significant fashion to which the Yen and Aussie will be affected one way or another.  

However, first up, we have key data from Australia today in August retail sales where the tax offset receipts should give a boost to spending. We also have the biannual RBA Financial Stability Review is released. RBA Assistant Governor (Economic) Ellis also speaks later. On that note, markets are pricing 12 basis points of easing at the 5 Nov RBA meeting, and a terminal rate of 0.34% (RBA cash rate currently at 0.75%).

AUD/JPY levels