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AUD/JPY struggles to justify strong Australian Retail Sales, with yields rising to approximately 95.00
AUD/JPY halts its decline from the intraday peak, but lacks bullish impetus. In July, Australia Retail Sales increased 1.3% compared to 0.3% projected and 0.3% previously. In the face of hawkish central banks and recession troubles, yields continue to rise. The gap between the Reserve Bank of Australia and the Bank of Japan encourages purchasers to remain optimistic despite the fact that price pressure is being exerted by risk-related problems.
AUD/JPY maintains Friday's retreat from a multi-day high despite Australia's July Retail Sales improvement, as reported during Monday's Asian session. With this, the cross-currency pair halts its decline from the daily high as it approaches 95.00.
Nevertheless, Australia's seasonally adjusted Retail Sales increased 1.3% MoM in July, above 0.3% market predictions and 0.2% before.
Notably, the cross-currency pair, also known as the risk barometer, remains only moderately bid despite the recent uptick, as the market worries economic slowdown in response to aggressive rate hikes by the major central banks. In doing so, the quote disregards the recent seven basis point (bps) increase in US Treasury yields to 3.106%.
Governor of the Bank of Japan (BOJ) Haruhiko Kuroda's weekend remarks could fall along the same line. Reuters reported that Bank of Japan (BOJ) Governor Haruhiko Kuroda stated at the Kansas City Fed's annual conference in Jackson Hole Symposium, Wyoming over the weekend that the central bank will likely continue its accommodative policy in Japan.
The underlying cause may be related to the Japanese yen's safe-haven status, as well as dovish remarks by the Reserve Bank of Australia (RBA) in the past, not to mention the most recent US-China conflict. Additionally placing downward pressure on the AUD/JPY exchange rate may be the Japanese government's willingness to increase stimulus.
To assess the short-term movements of the cross-currency pair, AUD/JPY traders should wait for unambiguous signals from the monetary policy authorities of Australia and Japan, in addition to monitoring the newly heightened recession concerns amid fears of rate hikes.
Triple peaks near 95.75-80 tempt AUD/JPY bears, but the bearish bias rests on a decisive breach of a three-week-old support line, which was at 94.45 at the time of publication.
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