AUD/JPY rises to intra-day high after AU Trade Balance, China CPI/PPI awaited
- AUD/JPY holds onto recovery gains as data came in better than prior, weaker than forecast.
- The market’s risk tone has been cautiously optimistic amid fresh fires in Iraq after Wednesday’s recovery.
- China's inflation data, trade/political headlines will provide fresh impulse.
AUD/JPY remains on the front foot while taking the bids to 75.10 during early Thursday. The pair recently benefited from Australia’s monthly trade numbers while the previous recovery could be attributed to the US-Iran headlines.
Australia’s November month Trade Balance rose 5800M versus 5915M expected and 4502M previous readouts. Further details suggest that imports declined from 0.0% to -3.0% whereas exports grew beyond -5% prior to +2%.
Read: Aussie trade balance (Nov): 5800 M vs expected 5915 M
Not only Iran’s readiness to refrain from further attacks if the US doesn’t retaliate but the Trump administration’s report suggesting no major damages during the operation “Martyr Soleimani” also helped the market’s risk tone to recover the earlier losses caused due to such attacks.
Following that, the US President Donald Trump’s “All is Well!” and only a signal towards further sanction, in contrast to expected fire and fury, propelled the optimism afterward.
In doing so, the US 10-year treasury yields recovered from the early-Wednesday low of 1.707 to 1.87% by the day-end. Also portraying the risk-on was a strong performance by Wall Street.
However, reports of fresh fires in Iraq’s green zone during the early Asian morning seem to keep the risk tone under pressure. As a result, the US 10-year treasury yields stay on the back foot around 1.86% while S&P 500 Futures remain mostly unchanged at 3,260 by the press time.
Traders will now focus on China’s monthly inflation data for fresh direction amid calls of likely economic recovery in emerging markets by the World Bank in its latest forecast. It’s worth mentioning that trade/political headlines will keep the driver’s keep even around the data if any surprises arrive.
Technical Analysis
AUD/JPY prices regain their stand above 200-day SMA, which in turn signal further recovery towards 21-day SMA near 75.50. On the flip side, sellers will look for entry below 200-day SMA level of 74.88 to target the sub-74.00 area.