. AUD/JPY pressured by inflation expectations & China fears - 17 April

AUD/JPY pressured by inflation expectations & China fears – 17 April

AUD/JPY pressured by inflation expectations & China fears – 17 April

17 Apr 2023

The AUD/JPY currency pair is currently trading near its intraday low of around 94.00, as Australia’s Consumer Inflation Expectations eased in August, which is putting pressure on the sentiment. The data for Australia shows a drop to 5.9% from the previous reading of 6.3%, while the US Consumer Price Index (CPI) also decreased to 8.5% YoY in July, compared to the expected 8.7% and the previous reading of 9.1%. This has added to the economic concerns raised by the Reserve Bank of Australia (RBA), making it difficult for AUD/JPY bulls.

Furthermore, there are fears related to China, which is Australia’s biggest customer, weighing on the AUD/JPY prices. According to sources, US President Biden is reconsidering his stance on China tariffs following Taiwan’s response. Additionally, there has been a surge in coronavirus cases in China, with 700 new confirmed cases reported on the mainland on August 10, compared to 444 the day before, which is also putting pressure on the pair.

The S&P 500 Futures are currently showing mild gains, trading near 4,120, after Wall Street rallied, and the US Treasury yields remained mostly unchanged the previous day. However, with a light economic calendar, traders of AUD/JPY are expected to focus on risk catalysts, particularly those related to China, for fresh market impetus.

Technical Analysis:

In order to regain control, sellers of AUD/JPY need to breach the 50-day moving average (DMA) support level at approximately 93.85. Conversely, if the pair manages to break above its recent high of 94.42, it could entice bullish traders to take charge.