AUD/JPY STAYS PRESSURED AROUND 88.00 ON MIXED AUSSIE TRADE DATA, SOFTER YIELDS

AUD/JPY prints three-day downtrend near 88.00 as mixed Aussie trade numbers join downbeat Treasury bond yields to favor bears on early Thursday.

Talking about the Aussie trade numbers, the headline Trade Balance improved to 13,870M versus 11,100 expected and 11,688M prior. However, Exports and Imports both dropped to -3.0% and -9.0% compared to 1.0% and 5.0% respective priors.

Apart from the mixed Australian trade figures, the dovish bias of the Reserve Bank of Australia (RBA), versus the talks of the Bank of Japan’s (BoJ) exit from easy money policy, seem to exert downside pressure on the AUD/JPY prices.

On Wednesday, Reserve Bank of Australia (RBA) Governor Philip Lowe tried to appease hawks, following the RBA’s pause in rate hikes. The policymaker ruled out rate cuts while also saying, “Balance of risks lean toward further rate rises.”

On the other hand, chatters surrounding the BoJ’s further editing of the Yield Curve Control (YCC) policy under the new Governor allow the Japanese Yen (JPY) to remain firmer.

It should be noted that the challenges to the sentiment, mainly from China and the US, also keep the bears hopeful. Recently, US House of Representatives Speaker Kevin McCarthy’s talks with Taiwanese President Tsai Ing-Wen renewed the Sino-American tussles. On the other hand, consecutive downbeat employment clues from the US raise recession fears and roil the sentiment, as well as weigh on the risk-barometer AUD/JPY pair.

While portraying the mood, S&P 500 Futures print mild losses while tracing the Wall Street benchmarks. However, the yields remain pressured and weigh on the AUD/JPY. That said, the benchmark US 10-year Treasury bond yields dropped in the last five consecutive days to refresh a seven-month low on Wednesday while the two-year counterpart also printed a four-day downtrend before bouncing off 3.79% at the latest.

Moving on, risk catalysts will be important for fresh directions amid a light calendar and a long weekend in Australia. Among them, news from China and recession talks will gain major attention.