AUD lost significant momentum over JPY recently after downbeat economic reports from Australia along with the dovish RBA policy statement. The Reserve Bank of Australia left interest rates unchanged. Thus, AUD is expected to struggle further against JPY.
On the other hand, the Australian economy has been facing headwinds. Dismal economic performance has been proved by downbeat data. The Australian Housing market took a downturn which was unlikely to fall after 27 years of recession-free expansion. According to RBA Governor Lowe, the labor market has become the most important factor for RBA's monetary policy assessment. Further tightening of the labor market will contribute to gradual improvement in the wages and income.
Recently Australian Retail Sales report was published with an uptick to 0.1% from the previous negative value of -0.4% but analysts had expected a bigger increase to 0.3%. Besides, Trade Balance showed an increase to 4.55B from the previous figure of 3.77B which was expected to decrease to 2.85B.
On the JPY side, today Average Cash Earning report was published with a decrease to 1.2% as expected from the previous value of 1.5%, Household Spending increased to 2.0% from the previous value of 0.1% which was expected to decrease to -0.5%, Bank lending decreased to 2.3% which was expected to be unchanged at 2.4%, and Current Account increased to 1.83T from the previous figure of 1.63T which was expected to decrease to 1.39T. Moreover, Final GDP also showed an increase to 0.5% from the previous value of 0.3% which was expected to be at 0.4%.
To sum up, JPY has been propped up by economic reports which helped JPY to sustain gains over weaker AUD. Australia released high impact economic reports this month, so not much of an impulsive counter-move is expected to regain momentum over JPY in the coming days.
Now let us look at the technical view. The price is currently trading below 78.50. The price is heading towards 77.50 and later towards 75.00 support area in the coming days. Though the price is still inside a corrective volatile range, being below the dynamic level under strong bearish pressure indicates further downward momentum. As the price remains below 80.00 area with a daily close, the bearish bias is expected to continue.
