- AUD/JPY breaks the support line of a short-term descending triangle after Aussie GDP flashed heavy contraction.
- Australia’s Q2 GDP slumps the record low of 7.0% versus -0.3% prior.
- BOJ Deputy Governor Masazumi Wakatabe also crossed wires and spoke dovish.
- “Serious differences” among the US policymakers over stimulus, Sino-American tension fails to disappoint optimists.
AUD/JPY stands on a slippery ground while losing over 20 pips just after Australia’s Q2 GDP release on the early Wednesday. The pair earlier struggled to justify the risk-on mood as Aussie traders remained cautious.
Australia’s second quarter (Q2) GDP dropped 7.0%, the largest slump on record, due to the coronavirus (COVID-19)-led economic slowdown. In doing so, the growth figures, actually contraction, defies the previous quarter’s -0.3% QoQ results.
Read: Breaking: Aussie GDP contracts more than expected, hurting AUD crosses
On the other hand, the BOJ’s Wakatabe also followed the foot-steps of the RBNZ Governor Adrian Orr while showing readiness to support unconventional monetary policy tools if needed. The policymakers said, “Japan's economy in a very severe state but showing some signs of a pickup. Will take additional easing steps without hesitation if needed with an eye on the impact of a pandemic on the economy, prices for time being.”
Market sentiment remains mostly positive despite the recent comments from US House Speaker Nancy Pelosi suggest “serious differences” between the ruling Republicans and opposition Democratic Party over the coronavirus (COVID-19) relief package. Also challenging the mood could be the early-day statements from US Secretary of State Mike Pompeo who cited upcoming announcements concerning China while also teasing the “cold war” situations between the global superpowers. It should also be noted that the uncertainty surrounding the Japanese leadership after Prime Minister Shizo Abe’s resignation also probes the bulls.
Supporting the market optimism could be the news that AstraZeneca will start its final trials over the much-awaited virus vaccine. Also on the positive side are receding cases from Australia and Tokyo, 90 and 170 respectively.
Having witnessed the initial reaction to the key Aussie data, AUD/JPY traders will have to pay close attention to the news feeds amid a light calendar. In doing so, updates concerning Japan’s PM selection and the US-China relations may gain major attention.
Technical analysis
The previous day’s Doji, followed by Wednesday’s downbeat performance, joins overbought RSI conditions on the daily chart to keep the sellers hopeful. However, an ascending trend line connecting highs marked in June and July, near 77.00, will be the key support to watch.
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.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.