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AUD/JPY: Off intraday high, still above 70.00, following BOJ, China NPC updates

  • AUD/JPY seesaws around the intraday low of 70.58.
  • BOJ announced loans to small and mid-sized firms in a surprise meeting.
  • China NPC drops GDP target for 2020, comments intensify tussle with the US over Hong Kong issue.

AUD/JPY drops to 70.65, intraday low of 70.58, after the recent catalysts from Japan and China weigh on the pair during early Friday.

Bank of Japan (BOJ) left monetary policy unchanged, as expected, in its surprise meeting. Though, the Japanese central bank offered 75 trillion yen load schemes for the small and medium firms to combat the coronavirus (COVID-19).

Read: Breaking: BoJ maintains short-term interest rate target at -0.1%

On the other hand, updates from China’s 13th National People's Congress (NPC) weigh on the risk-tone and help the Japanese yen to extend recoveries. In addition to dropping the GDP target for 2020, Chinese diplomat show readiness to tighten grip in Hong Kong, which in turn will escalate the Asian major’s tussle with the US.

Recently, the US Senate Majority Leader McConnell mentioned that China’s further crackdown on Hong Kong will intensify the Senate’s interest in re-examining the US-China relationship.

It should also be noted that the early-Asian news concerning China’s push for domestic coal and consul-general’s sudden departure from Western Australia offers additional downside pressure to the pair. Furthermore, Fitch downgraded Australia’s outlook to negative while keeping AAA rating before a few hours.

Amid all these negatives, there is a ray of hope as the Chinese NPC shows readiness to implement the trade deal with the US.

As a result, stocks in Asia-Pacific remain mostly sluggish while the US 10-year Treasury yields also linger below 0.70% by the press time.

Looking forward, an absence of major data will keep the qualitative catalysts in the spotlight for fresh impetus.

Technical analysis

The pair’s confirmation of a short-term rising wedge bearish technical formation drags it towards a 200-HMA level near 69.75. Alternatively, an upside break beyond a three-day-old rising trend line, at 71.15 now, can propel the pair towards March month high around 71.50/55.

 

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