The cross in AUD/JPY failed to resist the spike above 87 handle and fell back into negative territory, as the latest Australia’s June quarter GDP data left the markets unimpressed.
AUD/JPY drops back to test 20-DMA at 86.91
The AUD/JPY cross eroded more-than 20-pips rapidly and reversed back below 87 handle, following the release of in-line with estimates Aus growth numbers, with markets resorting to ‘Sell the fact’ trading, as such an outcome was already priced-in by the markets.
Moreover, against the back drop of the North Korean missile threat, the Yen continues to remain underpinned, keeping any upside attempt in the pair capped.
Also, ongoing US dollar weakness amid dovish Fedspeaks and bad economic data, the USD/JPY pair remains depressed, further adding to the renewed weakness seen in the cross.
Looking ahead, risk remains to the downside in the prices amid cautious markets and ahead of the key US ISM non-manufacturing PMI, Aus retail sales and trade balance releases.
Higher side: 87.19/20 (daily top/ 10-DMA), 87.43/50 (50-DMA/ psychological levels), 88 (round number)
Lower side: 86.58 (classic S1/ Fib S2), 85.93 (Aug 18 low 85.46 (200 & 100-DMA)
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