AUD/JPY: Mildly bid around 81.50 amid mixed concerns
- AUD/JPY snaps two-day downtrend, picks up bids to refresh intraday top.
- Easing virus numbers from Australia, pullback in US Treasury yields underpin latest consolidation.
- Japan’s upbeat GDP fails to entertain traders amid pre-ECB cautious, covid fears and challenges for US stimulus.
- Bears remain hopeful as RBA seems cautiously optimistic, risk catalysts are the key for fresh impulse.
AUD/JPY consolidates the weekly losses while picking up the bids around 81.55, up 0.10% intraday, during early Wednesday. The cross-currency pair dropped the most in two weeks the previous day after the market sensed fears in the RBA tapering and the virus woes, as well as stimulus fears, joined the risk-off mood.
The latest recovery could be linked to a pause in the US 10-year Treasury yields near the two-month high as well as upbeat Japanese data, not to forget the easing coronavirus numbers from Australia and Japan.
The US 10-year Treasury yields drop 0.06 basis points (bps) to 1.365%, taking a breather after a three-day uptrend and crossing the August month’s high.
Australia’s key infected states, namely the New South Wales (NSW) and Victoria report a reduction in the COVID-19 numbers in the last three days, taking down the national total to near 1,500 from 1,760 marked on September 04. On the other hand, Tokyo’s infections also stay 1000 infections, after more than a month of above 1,000 figures.
Even so, the coronavirus woes from the US and stimulus chatters flash negative signals of late. It should be noted that Japan’s Final GDP for Q2 crossed 0.4% forecast and 0.3% prior, to 0.5%, but couldn’t confirm the bullish bias as the nation struggles politically and battles the virus.
Amid these plays, the S&P 500 Futures struggle for a clear direction while the Asia–Pacific stocks seesaw after downbeat performance of the Wall Street benchmarks.
On Tuesday, the RBA surprised markets by announcing details of its bond purchase tapering but kept the benchmark interest rate unchanged at 0.10%, also maintained the 0.10% target for the April 2024 Australian Government bond, while matching expectations. Even so, the Rate Statement conveyed economic fears due to the virus-led local lockdowns and pushed the Australian dollar towards the south.
Moving on, a light calendar keeps risk catalysts on the driver’s seat. Among them, Thursday’s European Central Bank (ECB) and covid updates are the key to follow.
Technical analysis
A downside break of a three-week-old rising trend line, coupled with sustained trading below 200-DMA, keeps AUD/JPY bears hopeful unless the quote crosses the 82.10 hurdle.