Dismal Aussie retail sales push AUD/JPY below 50-DMA

The decline in the consumer spending as represented by the retail sales has not gone done well with the Aussie bulls. The dismal reading pushed the AUD/JPY below the 50-DMA level of 87.27 levels. 

Aussie July retail sales came-in 0.0% at vs. 0.3% expected. This follows a rise of 0.2% in June 2017 and a rise of 0.6% in May 2017. Aussie trade surplus narrowed to AUD 460 million in July as opposed to the expected rise to AUD 875 million from the previous month’s print of AUD 856 million.

The cross, which traded at a session high of 87.51 ahead of the data release, took a U-turn following the dismal readings and fell to a session low of 87.11 levels. 

Meanwhile, the bid tone around the Japanese Yen weakened during the overnight trade after Trump struck a deal with Democratic congressional leaders on Wednesday to increase the debt limit and finance the government until mid-December.

The decline in the AUD/JPY, a global risk barometer, could be read as an advance sign of risk aversion during the day ahead. However, that is not the case today as the losses are due to domestic factors, i.e. weak Aussie data. 

AUD/JPY Technical Levels

The cross was last seen trading around 87.16. A break below 86.97 [38.2% Fib R of July 27 high - Aug 11 low] would open doors for a sell-off to 86.73 [Sep 5 low] and 86.56 [previous day’s low]. On the other hand, a break above 87.24 [1-hour 100-DMA] could yield 87.51 [resistance on 1-hour] and 87.61 [Sep 5 high on 1-hour].