AUD/JPY: Sellers return post-downbeat Aussie data

AUD/JPY dropped to 79.15 after Australian building approvals slide past +1.8% market consensus to -8.4% in December.
The housing market indicator recovered a bit from its -32.8% yearly slump in November to -22.5% in the final month of last year.
Challenges to the RBA and JPY’s safe haven appeal signals AUD/JPY weakness.

The AUD/JPY trimmed 30 pips towards 79.15 after Australian building approval dropped to -8.4% from +1.8% market consensus in December. While monthly housing market indicator declined by -8.4%, there was a reduction of -22.5% compared to -32.8% on YoY basis.

With the headline inflation trading under the Reserve Bank of Australia (RBA) target, lack of recovery in housing market added to weakness into the Aussie. As a result, Japanese Yen (JPY) benefited from the Aussie weakness and surged to 79.15 just after the data release.

Given the challenges to RBA, TD securities say “The RBA commentary is likely to flag downgrades to GDP forecasts but for CPI forecasts to remain unchanged. Risk is for inflation to take longer to return to target.” As a result, the Aussie may have to bear the burden of unclear monetary policy signals. On the other hand, the JPY may take advantage of its safe haven appeal at the time of uncertainty surrounding Brexit and trade talks.

AUD/JPY Technical Levels

Technically, the 80.70 and the 81.25 are nearly resistances for the AUD/JPY if it manages to cross the 79.60 upside barrier. Alternatively, a month old ascending support-line, at 78.80, seem crucial support for the pair, breaking which can drag it to 78.00 and then to the 77.10 rest-points.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.