AUD/JPY reacts positively to Australia’s inflation data
- AUD/JPY recovers from the intra-day low after Australia’s third-quarter (Q3) Consumer Price Index (CPI) met market forecasts.
- Risk-tone heavies ahead of an eventful day, political plays surrounding trade/Brexit add weight.
- All eyes on the Fed’s action while US GDP, BOC expected to offer intermediate moves.
With the headlines inflation numbers meeting upbeat consensus, AUD/JPY rises to 74.70 by the press time of the Asian session on Wednesday.
Australia’s Q3 CPI meets 0.5% QoQ and 1.7% YoY forecasts, compared to 0.6% and 1.6% respective priors, whereas RBA Trimmed Mean CPI remains unchanged, in line with expectations, at 0.4% QoQ and 1.6% yearly basis.
Markets react positively to the Aussie data while buying the Australian Dollar as the data helps support the RBA Governor’s latest upbeat comments turning down the odds of negative rates.
Risk tone has been a bit heavier off-late as investors seem to await for the key market data/events led by the US Federal Reserve’s (Fed) monetary policy decision and the preliminary reading of the US third quarter (Q3) Gross Domestic Product (GDP). Also weighing on the sentiment are the news concerning the likeliness of the United States’ (US) sanctions on Turkey, receding odds of the US-China meet in Chile and Chinese envoy’s warning to the US as far as the Trump administration’s comments over Xinjiang is concerned.
Having witnessed the initial reaction to Australian inflation numbers, markets are largely expected to be driven by news headlines amid a lack of economic data/events on the calendar ahead of the European/US session. Among them, trade/Brexit headlines will keep the drivers’ seat while political plays surrounding Turkey could also add to market volatility.
Technical Analysis
The pair needs a sustained break above two-week-old horizontal resistance, near 74.83, in order to aim for July month low near 75.15 and resistance-line of a bit broader rising channel, at 75.57. Meanwhile, the pair’s downside break below channel’s support, around 74.25/27, could recall 73.00 that includes multiple lows marked since the middle of the month.