The AUD/JPY currency pair has recently seen a resurgence, approaching a two-month high, primarily supported by a range of factors. Comments from Japan’s incoming Prime Minister, Shigeru Ishiba, regarding the necessity for the Bank of Japan (BoJ) to maintain an accommodative monetary policy have shifted attention away from positive domestic economic indicators, weakening the Japanese Yen (JPY). Concurrently, robust Australian retail sales figures have bolstered the Australian Dollar (AUD), forking renewed optimism driven by potential stimulus measures in China.
In the past few trading sessions, the AUD/JPY has attracted attention from buyers, managing to ascend between the 99.75 and 99.80 range during the Asian trading hours. This ascent brings it closer to a critical resistance level represented by the 200-day Simple Moving Average (SMA). Ishiba’s assertion underscores his commitment to keeping the monetary policy loose, in light of the frail economic recovery, overshadowing generally favorable macroeconomic data from Japan.
Recent statistical reports indicate that Japan’s unemployment rate fell to 2.5% in August, down from the previous 2.7%. Additionally, a Tankan survey from the BoJ highlighted stability in sentiments among major manufacturers and a slight improvement in the mood among non-manufacturers for the third quarter. Nevertheless, the BoJ’s summarized opinions suggest a readiness to modify the accommodative stance contingent on economic recovery.
On the Australian side, the AUD gained momentum following a 0.7% rise in retail sales for August, a notable improvement from the earlier modest increase. This upbeat performance is further supported by the Reserve Bank of Australia’s hawkish sentiments and the expectation of Chinese economic stimulus, which act as significant driving forces for the AUD/JPY pair.
Looking ahead, it remains uncertain whether the bullish momentum can persist or falter near the critical psychological level of 100.00, particularly as market expectations grow regarding the likelihood of a BoJ interest rate hike before year-end. Additionally, the recent formation of a ‘Death Cross’ on daily charts, indicated by the 50-day SMA crossing below the 200-day SMA, suggests a cautious approach for traders contemplating bullish positions in the AUD/JPY cross.
