AUD/JPY sellers attack 76.00 on dovish rhetoric from RBA

• AUD/JPY defies three-day winning streak while extending pullback from 76.44.
• American lawmakers fall apart stimulus talks, discussions will continue on Monday.
• Aussie Treasurer announced extra stimulus, Japan’s Household Spending recovered.
• China's trade balance, Trump’s action and virus woes to join US-Canada tension for fresh direction.

AUD/JPY drops to an intraday low of 76.17 following the RBA’s Monetary Policy Statement on early Friday. The pair previously struggled to keep the 12-day high flashed on Thursday as risk-tone dwindles. Among major catalysts, the US policymakers’ failure to announce any stimulus and the fresh tussle with Canada grabbed major attention. Also in the spotlight was Australia’s addition of $15.6 billion into the JobKeeper program. Other than the RBA’s downbeat catalysts, Assistant Governor (Economic) Luci Ellis’ comments also pressured the quote.

Read: RBA August Statement on Monetary Policy: Sees unemployment at 10% by end of year

Out of the $15.6 billion packages, $13.00 billion is allocated towards combating coronavirus (COVID-19) woes in Victoria. “Treasurer Josh Frydenberg has announced changes to the program, taking the total cost to $101 billion, making it the most expensive program the Federal Government has ever funded,” said ABC News. The latest forecasts suggest the Victorian pandemic number be around 451 following the previous day’s 471 mark.

US Senate Democratic Leader Chuck Schumer confirms that the lawmakers are far apart on the much-awaited trade deal. The same pushed Republican leader Mitch McConnel to push the diplomats towards discussions on the aid package even during the general August vacation.

Talking about the virus, Victorian Premier Daniel Andrews will soon be speaking about the state’s condition and government efforts. On the other hand, Japan’s Tokyo marked 360 cases on Thursday, up from 263 prior.

Elsewhere, the US recalled aluminum tariffs on Canada and triggered a fresh trade war before inching closer to ban a few more of the Chinese apps. Additionally, Japan’s Overall Household Spending for June recovered from -7.5% forecast to -1.2%.

Hence, while risk catalysts remain heavy on the pair, RBA’s pessimism offered the latest hint to step back from the multi-day top. Though, some of the key events are still left for playing their roles, which in turn continues to trouble the AUD/JPY traders.

Looking forward, China’s July month trade numbers will be an immediate catalyst to watch while updates concerning the pandemic, US stimulus and Washington-Ottawa tussle can offer extra directions. Forecasts suggest, China’s trade balance to recede from $46.42B to $42B whereas US President Donald Trump is most likely to use executive order to offer details of unemployment benefits. While the former may result in the pair’s pullback, the later may add strength to the pair’s upside near a two-week top.

Technical analysis

An ascending trend line from June 12, at 75.30 now, becomes the key support for sellers to watch during the further downside. Meanwhile, the pair’s further upside is capped around 77.00.