AUD/JPY struggles to defy two-day losing streak beyond 74.00
|- AUD/JPY recedes from the intraday high of 74.41.
- Fresh updates concerning the coronavirus, US-China tussle challenge the market’s previous risk-on mood.
- Hopes of further stimulus, virus vaccine news tame the bears.
- Japan’s Tertiary Industry Index might offer intermediate moves, qualitative catalysts to remain as the key drivers.
AUD/JPY declines to 74.28 ahead of the Tokyo open on Monday. In doing so, the quote trims the early-day gains from 74.30 to 74.41. It’s worth mentioning that the pair flashed two consecutive days of losses during the late last week, which in turn keeps it near to the month-start lows.
While Friday’s optimism offered a positive start to the pair, the traders’ reassessment of the risk catalysts, backed by the coronavirus (COVID-19) news and the Sino-American tussle, seems to have recently attacked the market’s risk-tone sentiment. Though, hopes of further stimulus and increasing odds of the cure to the pandemic raise the bars for the bears.
Worsening virus conditions at home and abroad become the key reason for the AUD/JPY pair traders’ worries. Not only the global daily record high of new cases above 500,000 but a three-digit weekly count in Victoria and a surge in the new cases from New South Wales (NSW) also highlight the risk of the pandemic. During the last week, the Aussie government announced various restrictions on the border and stepped back from the further easing of the lockdown. Though, a major virus outbreak taking clues from Melbourne’s pub recently threatened the policymaker’s efforts. Even so, news that the Australia’s University of Queensland will begin human trials for a COVID-19 vaccine on 120 subjects keeps the bulls hopeful.
Elsewhere, tension among the world’s top two economies continues to escalate as neither of them wants to step back from a showdown. While the US warned its citizens living in China for arbitrary arrests, Beijing cites the Trump administration backed efforts to increase presence in their land to spoil the mood further. However, the Wall Street Journal’s (WSJ) news that the US has a few options to punish China over the Hong Kong security law, considering the city’s status as a financial hub, tames the risk-off mood.
Against this backdrop, the S&P 500 Futures attack June month top while taking the bids near 3,189, up .30% on a day. On the other hand, the US 10-year Treasury yields refrain from extending Friday’s optimism while declining to 0.63% as we write.
Moving on, the May month Tertiary Industry Index from Japan, prior -6.0% MoM, could offer intermediate direction to the pair amid a light calendar. However, major attention will be given to virus news, US-China tension for fresh impetus.
Technical analysis
Given the pair’s sustained break of an ascending trend line from May 22, at 74.82 now, sellers can keep attacking 74.00 round-figures.
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