AUD/JPY refreshes weekly low near 93.50 on mixed Aussie trade data, risky mood

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  • AUD/JPY accepts offers to renew multi-day low, down for third day in a row.
  • Headlines surrounding North Korea’s missile attacks and covid are weighing on risk appetite.
  • The Fed’s decision boosted yields and drowned stocks earlier.
  • Yields and risk catalysts are important for further momentum ahead of the RBA’s monetary policy statement.

AUD/JPY is on shaky ground near the mid-93.00 in Thursday’s Asian session amid mixed Australian trade data and risk aversion. In doing so, the cross currency pair shrugs off firmer Treasury bond yields during the three-day downtrend to the lowest levels since October 24th.

Australia’s trade surplus rose to 12,444 million in September from 8,850 million expected and 8,324 million previously, while exports rose 7.0% from 2.6% previously. However, Import growth fell to 0.4% from 4.5% previously.

Elsewhere, North Korea’s missile launches and Japan’s warning to residents weigh on the market‘s risk profile, which in turn weighs on the pair’s risk barometers. On the same line could be coronavirus fears from China, as the lockdown surrounding the area involving the world’s largest iPhone factory has defied hopes of easing the dragon nation’s zero covid policy.

Of note, 10-year US Treasury yields hit their highest level in a week, firming around 4.11% at press time. The reason could be related to the speech by the Chairman of the US Federal Reserve (Fed) highlighting the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. It should be noted that the Fed’s 75 basis point rate hike could not help yields earlier on Wednesday.

Against this backdrop, S&P 500 futures are posting slight losses at the latest while trailing the pessimistic performance of Wall Street.

Going forward, a light calendar at home could restrain AUD/JPY moves, as well as anxiety ahead of the Reserve Bank of Australia’s (RBA) monetary policy statement, which will be published on Friday. Even so, sour sentiment could keep the pair headed south.

Technical analysis

A sharp break lower in the 21-DMA, around 93.65 at press time, directs AUD/JPY towards horizontal support at 92.80.

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