AUD/JPY: Comments from RBA’s Lowe, sluggish Aussie GDP recall sub-79.00 area

AUD/JPY drops to a fresh two-week low around 78.60 during early Wednesday. The pair declined recently as comments from RBA Governor and fourth quarter reading of Australian GDP pleased Aussie bears.

The AUD/JPY pair initially dropped beneath four-week-old ascending support-line, at 79.10 now, as Q4 2018 Australian GDP dropped to 0.2% QoQ (versus 0.3% consensus) and 2.3% YoY (against 2.5% forecast).

Adding strength to the downside momentum was comments from the Reserve Bank of Australia (RBA) Governor Philip Lowe while speaking at the Australian Financial Review's Business Summit, in Sydney. In his speech titled “The Housing Market and the Economy", RBA’s Lowe said it is difficult to see rates will rise in 2019 while also saying that the Q3 and Q4 GDP likely to be significantly lower.

With the sluggish GDP and dovish comments from the central bank Governor, investors turned bearish and forecasted rate cuts during the year 2019. AMP Capital was spotted looking for 2 rate cuts during the present year.

Given the rate-cut calls for the RBA providing additional damage to market risk sentiments, the Japanese Yen (JPY) grew stronger versus the Aussie Dollar (AUD) off-late.

Looking forward, Thursday’s Australian trade balance and retail sales will be closely observed for immediate impulse. The January month retail sales growth is likely to be +0.3% versus -0.4% prior contraction whereas the trade balance figure may weaken to 3,000M against 3,681M registered during the December month.

AUD/JPY Technical Analysis

Considering the pair’s sustained trading under 79.10 support-turned-resistance, 78.30, 78.00 and 77.40 are likely following numbers to please Bears.

Meanwhile, an upside clearance beyond 79.10 may help the pair to aim for 79.80 and 80.00 levels.