AUD/JPY jumps from the 200-DMA, rallies above 92.50 following hot US CPI
- AUD/JPY advances on a risk-on impulse, despite high US inflation.
- Wednesday’s BoJ’s Kuroda dovish commentary weighed on the JPY.
- AUD/JPY’s fall capped at the 200-day EMA at 90.75, from which the pair rallied to 92.83, the day’s high.
The AUD/JPY extends its gains on Thursdays, following the release of US economic data, which initially weighed on most G8 currencies but the greenback, but a risk-on impulse, propelled risk-perceived currencies, namely the Australian dollar. Therefore, the AUD/JPY is trading at 92.68, above its opening price by 0.56%,
US equity indices are set to finish the session with more than 2% gains each. Earlier, US inflation data was reported, with headline CPI rising by 8.2% YoY, less than estimates. The so-called core CPI, which excludes volatile items, surprisingly jumped more than the 6.5% expected YoY, up by 6.6%. Therefore, market participants had priced in a ¾ percent Federal Reserve rate hike at November’s meeting.
The AUD/JPY dived on the news release but bounced off the lows, under 91.00, and staged a comeback above 92.50, a 150 pip rally.
Aside from this, the lack of Aussie economic data leaves AUD/JPY traders leaning on market sentiment dynamics, which favored the AUD/JPY upside. Earlier in the month, the Reserve Bank of Australia decided to raise rates by 25 bps when markets were expecting a 50 bps increase, perceived by a dovish hike, with market participants flying away from the AUD, seeking return.
On the Japanese front, Bank of Japan Governor Haruhiko Kuroda said that one-side moves in the yen driven by speculation are bad for the economy. Kuroda noted “Yen depreciation may have a good impact on the macroeconomy as a whole, but there are some sectors which are suffering.”
Furthermore, Kuroda commented that the BoJ would continue its monetary easing program to achieve the inflation 2% target in a stable and sustained manner.
All that said, the RBA’s dovish hike, and BoJ’s dovish stance, would likely bolster the AUD/JPY. So traders should expect further AUD appreciation after achieving the bearish-flag pattern target, opening the door for further gains.
Next, the Japanese economic calendar will feature M2 Money Supply, while the Aussie’s docket is empty. AUD/JPY traders should also be aware of China’s calendar, which will feature PPI, CPI, and its Trade Balance.
Also read: AUD/JPY Price Analysis: Retraces from around 92.30s on dampened mood
AUD/JPY Key Technical Levels
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
