To say that the Aussie labor market is on fire would be an understatement. The August report released today bettered estimates by a big margin, the result being a sharp rise in the Australia 10-year government bond yield and a strong Aussie dollar.
Following the release of the strong data, the AUD/JPY took out the weekly 200-MA hurdle of 88.45 and jumped to a 7-week high of 88.74. The 10-year Aussie government bond yield rose to 2.743%, the highest level since August 31.
The other side of the story, i.e. the Japanese Yen remains on the back foot, courtesy of the risk-on action across the globe. Thus, the AUD/JPY cross could extend the rally to fresh multi-week highs, especially if the China industrial production and retail sales number due at 2:00 GMT beat estimates.
Looking ahead, potential jawboning from the RBA or the resurgence of geopolitical tensions are the only two factors that could derail the rally in the AUD/JPY cross.
AUD/JPY Technical Levels
The immediate resistance is seen at 89.00 [zero levels], which, if breached would open doors for 89.42 [July 22 high]. The next major hurdle is the psychological level of 90.00. On the downside, failure to hold above 88.45 [weekly 200-MA] would open doors for a technical correction to 88.00 [zero figue] and 87.77 [1-hour 100-MA].
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