Despite weaker than expected and prior Australian trade balance numbers, AUD/JPY escalates its previous run-up to fresh three-week high while taking the bids to 72.70 during early Thursday.
Australia's July month trade numbers flashed mixed outcomes as the headlines Trade Balance slipped beneath 7,400M forecast and 8,036M prior to 7,268M actual while Imports grew 3% versus -4% prior contraction. Further, Exports remain unchanged with 1% growth.
It should also be noted that upbeat comments from the Fed’s Beige Book, Bank of Canada (BOC) and a lack of dovish statements from the Fed speakers offered additional assurance to risk-takers. Furthermore, the latest news from China’s Commerce Ministry that the US-China trade talks will take place in October in Washington adds strength to the market bulls.
As a reaction, the US 10-year treasury yields are gaining nearly six basis points (bps) to 1.516% by the press time.
Having witnessed initial reaction to Australia’s trade balance, investors are left with no major data from either Australia or Japan, which in turn increases the importance of trade/political news headlines to determine near-term pair moves.
The pair’s needs a sustained break above 72.37/38 area including falling trend-line since August 02 and 38.2% Fibonacci retracement of July-August downpour in order to aim for 73.18/22 area including August 02 high and 50-day exponential moving average (EMA). If prices fail to hold recent upside momentum, 21-day EMA level of 72.12 and August 29 top surrounding 71.80 could flash on the sellers’ radar.