- AUD/JPY declines after Australia’s Westpac Leading Index dropped to a multi-year low.
- Japan’s trade data offered additional weakness to the pair while market sentiment remains sidelined ahead of the Fed decision.
With the Aussie data keeps portraying economic weakness, the AUD/JPY pair drops to an intra-day low of 74.12 during initial Asian session on Wednesday.
The pair witnessed downside pressure after Australia’s August month Westpac Leading Index slipped to 2016 low around -0.30% versus 0.14% prior on the MoM basis. Adding to the sellers were Japan’s August month trade data that showed recovery in Exports and Merchandise Trade Balance while also flashing higher than anticipated -11.2% decline in YoY imports to -12.0%.
Japan’s Merchandise Trade Balance shrank lesser than ¥-355.9B expected to ¥-136.3B with the exports declining -8.2% against -10.9% forecasts on a YoY basis.
It should also be noted that recent recovery in risk sentiment, mainly due to trade-positive headlines and expected a speedy recovery in Saudi Arabia’s oil production, have been taking a halt ahead of the key monetary policy meeting by the US Federal Reserve.
The US central bank is expected to announce another 0.25% rate cut during the year 2019 while likely being cautious for further downside moves. However, close attention will be given to the quarterly economic projections, Fed’s monetary policy statement and the Chairman’s press conference for near-term direction.
While 50-day exponential moving average (EMA) around 73.50 can act as immediate support, a three-week-old rising trend-line near 73.08 will limit the pair’s further declines. On the upside, a sustained break of 74.55, comprising 100-day EMA, should recall buyers targeting 75.13/20 region comprising multiple highs and lows marked during July.
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