- AUD/JPY attracts strong selling following the release of weaker domestic GDP growth figures.
- A slightly oversold RSI on the daily chart triggers intraday short covering on the cross.
- Expectations of an early RBA rate cut and a BoJ rate hike in December should limit the upside.
The AUD/JPY cross fell to its lowest level since September 18 during the Asian session on Wednesday, as the release of a weaker Australian GDP increased bets on an early interest rate cut by the Bank of the Reserve Australia (RBA). Furthermore, expectations that the Bank of Japan (BoJ) will raise interest rates again in December contribute to the relative performance of the Japanese Yen (JPY) and put additional pressure on the currency pair.
However, spot prices managed to bounce over 70 pips from levels below 96.00 and are currently trading around 96.70, down 0.20% on the day. The Relative Strength Index (RSI) on the daily chart shows slightly oversold conditions and turns out to be a key factor causing some short covering in the AUD/JPY cross. That said, the technical setup warrants caution before positioning for further gains.
Last week’s break below the round figure of 98.00 was seen as a key trigger for the bears. Furthermore, the oscillators on the daily chart remain deep in negative territory. This, in turn, suggests that any further move higher could be seen as a selling opportunity ahead of the 97.00 level and cap the AUD/JPY cross near the 97.50 horizontal barrier. The latter could now act as a pivotal point for short-term traders.
On the other hand, the round figure of 96.00 could continue to offer some support. A convincing breakout and acceptance below that level will reaffirm the negative outlook and pave the way for further losses. The AUD/JPY cross could then slide towards the next relevant support near the 95.30 region en route towards the psychological mark of 95.00. The decline could eventually drag the spot prices towards the horizontal support of 94.45-94.40 and the 94.00 mark.
AUD/JPY daily chart
economic indicator
Gross Domestic Product (YoY)
The GDP is published by Australian Bureau of Statistics and is an estimate of the total value of goods, services and structures produced in Australia. It is a gross measure of economic activity because it indicates the rate of growth of a country’s economy. A reading above expectations is bullish for the Australian dollar, while a reading below is bearish.
Last post:
Wed Dec 04, 2024 00:30
Frequency:
Quarterly
Current:
0.8%
Dear:
1.1%
Previous:
1%
Fountain:
Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) publishes the Gross Domestic Product (GDP) quarterly. It is published about 65 days after the end of the quarter. The indicator is closely watched as it presents an important picture for the economy. A strong labor market, rising wages and rising private capital spending data are critical to the country’s improved economic performance, which in turn affects the Reserve Bank of Australia’s (RBA) monetary policy decision and the Australian dollar. . Actual numbers beating estimates are considered bullish for the AUD as they could prompt the RBA to tighten its monetary policy.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
