AUD/JPY: Bulls battle 78.50 on surprisingly welcome Aussie jobs report

• AUD/JPY takes the bids near two-day high of 78.53.
• Australia’s Employment Change grew more than expected, Unemployment Rate dropped below 7.0% in November.
• Market optimism recedes as US policymakers take one more day to offer the much-awaited stimulus, Sino-American tussle escalates.
• US aid package headlines, virus/vaccine updates will be the key.

AUD/JPY refreshes the two-day high to 78.53, currently up 0.14% around 78.45, after Australia’s upbeat employment data pleased bulls during early Thursday. The pair also cheers cautious optimism in the market amid hopes of the US coronavirus (COVID-19) stimulus and economic recovery on the back of vaccinations. Though, US-China tension tests the bulls.

Australia’s November month seasonally adjusted (s.a.) Employment Change grew past-50K expected to 90K while the Unemployment Rate dropped below 7.0% forecast and prior readings to 6.8%.

Read: Breaking: AUD/USD prints fresh cycle high on big-beat jobs data

Earlier in Asia, AUD/JPY eased the upside momentum as the US Senate members left Capitol Hill after progressive talks on the covid aid package. The policymakers were earlier expected to announce a deal today.

Also weighing on the risks could be the US-China tussle. Recently, Reuters came out with the news saying, “China's military declined to participate in slated virtual meeting with US military counterparts.” The report also quotes US Admiral, “Beijing's decision is another example that China does not honor its agreements.” Before a few hear, US Trade Representative Robert Lighthizer urged President-elect Joe Biden to not ease tariffs on China, Reuters said.

It’s worth mentioning that worsening virus conditions in Japan and the Northern Hemisphere battle the vaccine hopes while recently upbeat Brexit developments challenge the market bears.

Against this backdrop, Japan’s Nikkie 225 and S&P 500 Futures struggle for a clear direction whereas Australia’s ASX 200 gains 0.50% by press time.

Citi Bank recommends AUD/JPY long via call options while saying, “Investors have reduced risk in recent weeks. We do not think risk markets are pricing in the potential for these developments.”

Technical analysis

The bullish flag on the one-hour (1H) chart suggests the AUD/JPY buyers cheer sustained trading beyond 78.45/50 while eyeing the monthly top of 78.78. Also acting as an upside barrier is the late-April tops near 78.95. On the contrary, the ascending trend line from November highlight 78.00 and 77.95 as the key short-term support.