- AUD/JPY rose to new intraday highs on strong Australian data.
- Australian retail sales were well above market expectations of 0.7% month-on-month in May.
- Japan’s May retail boom failed to draw much attention as yields rebounded and sentiment improved.
- Japan’s second-class data, risk catalysts have a clear direction.
AUD/JPY justifies strong Australian retail sales while hitting intraday highs near 95.60 during Thursday’s Central Asian trading. In doing so, the cross currency pair ignores bright Japanese retail numbers amid strong yields and cautious optimism in the market.
However, Australia’s seasonally adjusted retail sales rose 0.7% month-on-month in May, compared with an expected 0.1% and 0.0% earlier, according to the Australian Bureau of Statistics (ABS) latest economic update. “Sales increased 4.2% year-on-year to A$35.52 billion ($23.52 billion), in line with growth in April but below the post-lockdown boom level of 19% seen mid-last year. far from it,” Reuters said after releasing the data. .
Strong Australian retail sales allowed the AUD/JPY to consolidate after the previous day’s sharp decline after disappointing Australian inflation data. On Wednesday, Australia’s May monthly consumer price index (CPI) fell 5.6% year-on-year to 6.1% from a previous forecast of 6.8%. The same fueled fears that the Reserve Bank of Australia (RBA) would suspend rate hikes after two consecutive hawkish surprises, resulting in a drop in the Australian dollar (AUD).
On the other hand, May’s retail growth in Japan jumped to 5.7% year-on-year from the forecast of 5.4% and the previous (revised) 5.1%, but the seasonally adjusted figure was 1.3%, the main statistic. Due to the increase, it reversed from the previous contraction of 1.2%. Market expectations were -0.2% m/m.
Aside from the Australian data, Bank of Japan Governor Kazuo Ueda’s defense of monetary easing also appeared to have boosted the AUD/JPY price. Bank of Japan Governor Kazuo Ueda defended the dovish bias of Japan’s central bank policy makers, saying, “There is still a long way to go to sustainably achieve 2% inflation with sufficient wage growth.” ‘ said. Bank of Japan Governor Ueda also added that Japan’s economy will expand slightly above its potential for some time.
It’s worth noting that US Treasury Secretary Janet Yellen’s “hope” to visit China to re-establish deals has recently seemed to favor market sentiment. Also, the central bankers did not say anything new, giving traders a chance to consolidate the previous day’s moves and boost the AUD/JPY pair.
In the midst of all this, U.S. Treasury yields have rebounded, and by the time of this writing, S&P 500 futures have registered a modest rally.
Looking ahead, Japan’s Consumer Confidence Index for June is expected to be 36.2, up from 36.0 last time. Much attention will be focused on yield and risk factors to obtain
technical analysis
Despite the recent correction rally near the weekly support line at 95.10 at the time of writing, AUD/JPY buyers will need a test from the 10 DMA hurdle near 96.30 to regain control.