AUD/JPY Trading Volume Remains Low On Wednesday As Traders Remain Cautious Amid Release Of Australian Consumer Confidence Data
The AUD/JPY hovered around the 79.20 range on Wednesday, indicating that the Aussie consumer confidence data that was recently published did not have much of an impact on trader sentiments. An air of caution dominated the day especially with key announcements scheduled for the same day.
The market gravitated towards the side of caution the previous day (Tuesday), thus pushing down the AUD/JPY price to the levels that prevailed on Wednesday. Traders chose to remain cautious due to the uncertainties associated with the recent trade agreement between the U.S. and the European Union.
Factors that have been affecting the AUD/JPY performance
Political issues such as Brexit and the EU-U.S. trade standoff usually come with economic implications that affect trade and subsequently affect the mood of investors. This leads to a negative impact on the market. Such is the case with the AUD/JPY currency, and so the inverse is true where economic and political stability contributes to a positive investor mood, thus leading to a positive impact on the market. Meanwhile, the 10-year US Treasury yield, which is used as a tool to indicated market risk sentiment, dropped by two points to about 2.50%.
Earlier on Wednesday, there was news suggesting that AUD/JPY’s performance benefited even though slightly from the trade talks between Japanese and Chinese lawmakers. However, data from the Japanese side showed weak signals, and this is likely one of the factors that held back the currency pair despite the positive consumer data from Australia.
Positive remarks from Guy Debelle, the Assistant Governor at the Reserve Bank of Australia’s (RBA) have the potential to strengthen the currency pair’s performance. However, high-risk events such as those involving the EU Summit or the U.S.-China trade agreement have more influence over trading actions.
AUD/JPY might be headed towards a bullish breakout
The currency pair’s performance highlights the -2.5% decline in the forecasted Core machinery orders for Japan in February to settle at 1.8% on a month-over-month basis. On the flip side, April’s Westpac consumer confidence gained by +1.9% from the 4.8% that was previously reported. Sellers have been coming in at around the 79.60 range to avoid taking too much risk with their positions. The currency pair will eventually gain momentum and break through the resistance level.
Confidence around the Australian Dollar is growing, therefore increasing the likelihood of bulls taking over, thus pushing the currency pair towards an upside. So far the AUD has surged by 2.71% against the JPY since March 25. The latest price movement indicates that the exchange rate is slowly recovering some of the points that it lost. The currency pair sustained the Fibonacci levels at 79.75 and 80.00. It seems to be following the bull pattern that might see it react again at the 80.30 if it continues to follow the sequence.
Short-term bears in the AUD/JPY price movement might be restricted by the 79.10 support line that is part of a week-long upward sloping pattern. The currency pair’s weekly price movement features an ascending trend-line that hits the 79.35 mark.