- Yuan slide is likely hurting the AUD in Asia.
- The dismal Aussie housing data could be adding to the bearish pressure around the AUD.
The AUD/JPY is trading on the back foot, having created a bearish outside-day candle on Monday.
At press time, the currency pair is seen at 81.18 – down 0.30 percent on the day. The decline could be associated with the drop in Chinese Yuan and the weaker-than-expected Australia housing data.
The onshore Yuan (CNY) fell to 6.7099 per dollar – the weakest level since August 8, 2017, after the People’s Bank of China set the Yuan reference rate at 6.6497 – the weakest since August 25, 2017. The decline in CNY and other Chinese assets tends to drag the AUD lower as the Austalia currency is widely considered as a proxy for China.
Further, Aussie building permits unexpectedly fell 3.2 percent month-on-month in May, beating the estimated rise of 1 percent. The negative surprise is likely adding to the bearish pressure around the Australian currency.
And last but not the least, the moderate losses in the S&P 500 futures are likely keeping JPY bears at the bay.
All in all, the AUD/JPY pair looks set to extend the decline further, although the CNY is oversold, so there is always a risk of a corrective rally in the Chinese currency and the AUD.
AUD/JPY Technical Levels
Resistance: 81.36 (10-day moving average), 81.55 (session high), 82.11 (Monday’s bearish outside-day candle high)
Support: 80.98 (previous day’s low), 80.69 (June 28 low), 80.00 (psychological support).
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