AUD/JPY weakens from multi-week top as risk-tone dwindles

  • AUD/JPY falls to cheer trade-positive headlines amid uncertainty over Brexit, the Fed rate cut.
  • Japanese trade numbers, All Industry Activity Index will decorate the economic calendar.

With the global risk sentiment struggling between trade and Brexit, AUD/JPY declines to 74.15 amid the initial Asian session on Monday.

The pair recently surged to the highest since mid-September as an upbeat Australian Jobs report and a couple of mixed clues from the Reserve Bank of Australia’s (RBA) joined upbeat sentiment surrounding the US-China trade deal. It should also be noted that Westpac expects quantitative easing from the RBA starting from 2020 as its latest report says, “(RBA) is likely to be prepared to adopt some form of asset purchase program, if needed, over the course of 2020.”

In its latest trade update, the South China Morning Post (SCMP) quotes China’s Vice Premier Liu He as he said that “concrete progress” towards trade war deal in Washington was made.

On the contrary, the United Kingdom’s (UK) special Parliament session on Saturday failed to counter Brexit uncertainty as the British policymakers voted for Letwin Amendment rather than debating and voting on the Withdrawal Agreement (WA) Bill. As a result, the UK Prime Minister had to request another Brexit extension to the EU while the debate surrounding the WA Bill is still pending to take place sometime during this week.

Traders will now keep a tab over Japan’s September month trade numbers that are expected to register a fall in Merchandise Trade Balance Total and recovery in Exports/Imports.

Technical Analysis

Buyers look for entry beyond September month high, at 74.50, in order to aim for 75.00 and then targeting early-June low nearing 75.50. However, a downside break below 100-day Exponential Moving Average (EMA) level of 74.00 will not refrain from highlighting month-start top surrounding 73.40 to sellers.

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