AUD/JPY retreats towards 90.00 on downbeat Aussie data

• AUD/JPY extends pullback from daily top, reverses the previous day’s bounce off weekly low.
• Australia’s Q1 Private Capital Expenditure disappoints, cautious optimism in the market puts a floor under the prices.
• Fed Minutes renew market’s optimism but headlines from China, Ukraine test the bulls.

AUD/JPY takes offers to renew intraday low around 90.10, reversing the bounce off a one-week low during Thursday’s Asian session.

The cross-currency pair’s latest declines could be linked to Australia’s Private Capital Expenditure (Private Capex) data for the first quarter (Q1) of 2022. As per the latest figures, the Private Capex slumped to -0.3% versus 1.5% expected and 1.1% prior.

Also challenging the AUD/JPY prices could be the latest risk-negative headlines from China and Ukraine.

That said, “Ukrainian President Volodymyr Zelensky on Wednesday savaged suggestions that Kyiv gives up territory and make concessions to end the war with Russia, saying the idea smacked of attempts to appease Nazi Germany in 1938,” per Reuters. On the same line, China criticizes the US Draft Security Council resolution on North Korea and adds to the recently alive Sino-American tensions.

Also likely to escalate the US-China tussles could be the latest comments from US Trade Representative General Counsel Greta Peisch suggesting, “Review of US-Sino tariffs is likely to take ‘months’.”

On the positive side, the latest Federal Open Market Committee (FOMC) Minutes mentioned that the policymakers endorsed the idea of 50 basis points (bps) rate hikes for only the next couple of meetings, also raised doubts on the rate-lift trajectory past September and favored sentiment. The Minutes rather highlighted inflation concerns and mentioned, “It would be appropriate to consider sales of mortgage-backed securities.”

It’s worth noting that such statements renewed concerns of limited monetary policy tightening and helped Wall Street to post the biggest daily gains in a week.

While portraying the mood, the S&P 500 Futures print mild gains around 3,980 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 2.5 basis points (bps) to 2.77% at the latest.

Moving on, holidays in Europe and a light calendar in Asia could keep AUD/JPY moves depended on the risk catalysts ahead of Friday’s Australia Retail Sales for April, expected 0.9% versus 1.6% prior.

Technical analysis

AUD/JPY remains pressured towards a two-week-old ascending support line near 89.70 unless crossing the 21-DMA hurdle, at 90.85 by the press time.