AUD/JPY: Soft Australian wage data challenges trend-line break sentiments
- The AUD/JPY pair trades near 79.20 during initial Asian sessions on Wednesday.
- Weaker than expected wage price data from Australia and JPY’s safe-haven demand ahead of key risk events dragged the pair.
- 79.35 become immediate barrier towards 79.85 while 79.05 can offer nearby support to the pair.
AUD/JPY took a U-turn to 79.20 after Australia’s quarterly wage details on early Wednesday. In addition to weakness in the wage price index during the fourth quarter of 2018, renewed risk sentiments ahead of key events also triggered the pair’s pullback.
Australian wage price index slid below 0.6% market consensus to 0.5% during the final quarter of last year. The weakness in wage prices supports recent dovish comments from the Reserve Bank of Australia (RBA) and adds strength into speculations of a rate cut from an AU central bank.
On the other hand, Japanese Yen (JPY) grabs the limelight due to its safe-haven appeal ahead of key risk events like FOMC minutes. The minute statement communicating details of the January 30 Federal Open Market Committee (FOMC) meeting will be released at 19:00 GMT. The Federal Reserve refrained to alter Fed rate from 2.5% while communicating required caution for the future rate decisions during the meeting.
In addition to FOMC, doubts over the soft Brexit and progress of US-China trade negotiation mainly due to the tough demand from the US, currency assurance was the latest, also favor the pair’s downside.
The UK Prime Minister Theresa May will head to Brussels to meet European Commission President Jean-Claude Juncker today whereas China’s Vice Premier Hui Le will reach Washington for further negotiations on February 20.
AUD/JPY Technical Analysis
AUD/JPY should clear recent high of 79.35 to validate trend-line breakout and aim for 79.85 and 80.00 resistances.
Alternatively, pair’s dip beneath the resistance-turned-support line connecting highs marked on February 05 and 18, at 79.05, can fetch it back to 78.65 while an upward sloping support-line at 78.40 might confine further declines.