- AUD/JPY declines after Australia’s Westpac Leading Index dropped to a multi-year low.
- Japan’s trade data offered additional weakness to the pair while market sentiment remains sidelined ahead of the Fed decision.
With the Aussie data keeps portraying economic weakness, the AUD/JPY pair drops to an intra-day low of 74.12 during initial Asian session on Wednesday.
The pair witnessed downside pressure after Australia’s August month Westpac Leading Index slipped to 2016 low around -0.30% versus 0.14% prior on the MoM basis. Adding to the sellers were Japan’s August month trade data that showed recovery in Exports and Merchandise Trade Balance while also flashing higher than anticipated -11.2% decline in YoY imports to -12.0%.
Japan’s Merchandise Trade Balance shrank lesser than ¥-355.9B expected to ¥-136.3B with the exports declining -8.2% against -10.9% forecasts on a YoY basis.
It should also be noted that recent recovery in risk sentiment, mainly due to trade-positive headlines and expected a speedy recovery in Saudi Arabia’s oil production, have been taking a halt ahead of the key monetary policy meeting by the US Federal Reserve.
The US central bank is expected to announce another 0.25% rate cut during the year 2019 while likely being cautious for further downside moves. However, close attention will be given to the quarterly economic projections, Fed’s monetary policy statement and the Chairman’s press conference for near-term direction.
Technical Analysis
While 50-day exponential moving average (EMA) around 73.50 can act as immediate support, a three-week-old rising trend-line near 73.08 will limit the pair’s further declines. On the upside, a sustained break of 74.55, comprising 100-day EMA, should recall buyers targeting 75.13/20 region comprising multiple highs and lows marked during July.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.