AUD/JPY shrugs off BOJ Minutes, Japan data as US-China trade optimism fades

With the concerns surrounding initial trade agreement between the US and China grabbing the skeptics’ eye, AUD/JPY ignores signals from BOJ minutes and Japan data while stepping back to 75.17 during early Wednesday.

While minutes of the Bank of Japan’s (BOJ) October meeting keep exerting pressure on easy money policy, Japan’s Jibun Bank Services Purchasing Managers Index (PMI) for October slid into contraction with 49.7 figure versus 50.3 forecasts and 52.8 prior.

Even so, the AUD/JPY declines from fresh highs since July 26 as doubts concerning the US-China trade deal were unearthed by headlines from Nikkei and Global Times. Markets seem to ignore the news from Fox News that says the United States (US) and China will sign “Phase One” deal in Iowa.

As a result, the US 10-year treasury yields trim nearly two basis points (bps) from its latest gains to 1.85% by the press time.

It should also be noted that recently mixed statements from the US Federal Reserve (Fed)  policymakers add challenges to the market’s risk-tone following the rise in expectations of a stop in Fed’s rate cut.

Given the lack of major data/events up for publishing amid the Asian session, traders will follow trade headlines for immediate direction. Following that, Fedspeak will be in the focus during the US session.

Technical Analysis

An upward sloping trend line since October 25, at 74.58 now, seems to be the nearest support ahead of 21-day Exponential Moving Average (EMA) level of 74.28 and October 11 high close to 74.00. On the upside, the pair needs to clear July 18 low surrounding 75.45 to target the July month top of 76.28.