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AUD/JPY: Eyes on BoJ and Aussie jobs this week

  • AUD/JPY holding above 200-DMA, eyes on the BoJ.
  • Traders looking to central banks and key economic data releases.

AUD/JPY is currently trading flat in early Asia as markets prepare for the Bank of Japan and full markets returning tomorrow following the US holiday's overnight. At the time of writing, AUD/JPY is sat at 75.72 and consolidating a correction of the 5th wave of a bullish trend's sell-off to the lowest level YTD. 

Bulls have been in control since August 2019 where the price rallied from a low 69.95 where the trend had subsequently broken the 200-day moving average in mid-December of last year to go onto score a higher high in a 5th wave of trading a 76.54, some 8% higher. 

The fundamentals behind the move were associated with the US/Chinese negotiations and a constantly string US stock market, despite the fact that the Australian economy warrants intervention by the Bank of Australia, tipped to low-interest rates and potential implement QE. 

BoJ in focus

BoJ Minutes Preview: Little fanfare expected, dovish bias to persist, USD/JPY at a crossroads

With the holiday markets and erratic price action now behind us, likely leading to the sell-off in January to the lowest levels since early Dec down at 73.75, traders are back in full force and focus on the economic fundamentals and subsequent central bank monetary policies given that geopolitics is taking a back seat. 

First up, we have the Bank of Japan where the meeting will be producing quarterly forecasts. Markets are not expecting any fanfare here, with the BoJ "targeting around 0% on the 10-year JGB yield, -0.1% on banks’ excess reserves and the JPY80trn annual JGB purchase target which is rarely reached due to the priority given to “yield curve control," as the analysts at Westpac Banking explained. "The BoJ became a little more dovish in Q4 2019, saying it will, “pay close attention to the possibility that the momentum toward achieving the price stability target will be lost.”"

Looking ahead, we will start to see some crucial economic numbers from the RBA ahead of their meeting on the 4th Feb. The Aussie jobs numbers will be as crucial as ever. 

"Following the ~40k rise in headline employment in Nov, we are anticipating some giveback in Dec, with headline rising a milder +12k, which is line with the market. However, we do expect the unemployment rate to edge higher to 5.3% in Dec. Job vacancies data suggests employment growth is likely to slow over coming months, keeping open the debate on RBA easing,"

– analysts at TD Securities explained. 

AUD/JPY levels


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