AUD/JPY weakens on soft Aussie GDP data

• Australian GDP lagged behind consensus on a quarterly basis.
• Risk events remain highlighted for fresh direction.

AUD/JPY trades near 75.60 after testing the intra-day low of 75.50 on weaker than expected GDP data from Australia, released on early Wednesday.

Australia’s first quarter (Q1) 2019 gross domestic product (GDP) lagged behind 0.5% market consensus to 0.4% on QoQ basis while meeting 1.8% forecast versus 2.3% prior on a yearly format.

Yesterday’s rate cut from the Reserve Bank of Australia (RBA) and dovish comments from Governor Philip Lowe seems already priced as buyers held previous upside bias despite the outcome.

Risk tone turned heavy after Tokyo open as traders gave much emphasis to noises surrounding the US-China and US-Mexico trade tussles. The global barometer of risk sentiment, 10-year US treasury yield holds tightly to 2.12% while writing the article.

Despite lack of major economics, chances of witnessing active trade sessions can’t be ruled out as the US Vice President will host Mexican leaders for talks after the US President Donald Trump levied fresh tariffs on its trade partner for illegal migration.

Adding to the volatility could be developments on US-China trade tussle and comments from the Fed policymakers during their public appearances.

Technical Analysis

Sustained trading above 200-HMA highlights the two-week-old descending trend-line figure of  76.05 and 76.35 as near-term resistances whereas extended declines under 75.60 can take 75.30 and 75.00 as important supports before pushing bears towards July 2016 low near 74.50.