Fundamental Analysis of AUD/JPY for December 6, 2018

AUD/JPY is currently residing below 82.00 area amid the impulsive bearish pressure which pushed the price lower after a bounce off the 84.00 area with a daily close. AUD has been hurt by some sour data. Thus, AUD has lost in value a lot. Japan is trying to bring back stability to its financial sector as well as steady economic growth.

Citing Deputy Governor Debelle's speech today, Australia's central bank has room to cut policy rates from current record lows although the next move is still likely to be an increase rather than a decrease. The disappointing comment from Debelle triggered strong bearish pressure in the pair. On the other hand, Japan is showing steady economic growth. Recently Australia's GDP report was published with a decrease to 0.3% from the previous value of 0.9% which was expected to be at 0.6% and AIG Service Index increased to 55.1 from the previous figure of 51.1. Today Australia's Retail Sales report was published with an increase to 0.3% as expected from the previous value of 0.1% and Trade Balance surplus contracted to 2.32B from the previous figure of 2.94B which was expected to increase to 3.10B. As a result, AUD went into a nosedive. Another reason behind weakness in AUD is the risk aversion sentiment as traders resumed fears that the US and China might reignite the trade dispute.

On the other hand, today Bank of Japan's Governor Kuroda dismissed the chance of a near-term rate hike because raising rates may hamper the process of reaching the target inflation level of 2% which is around the corner. Kuroda stated that raising interest rate may be beneficial to the domestic economy, but monetary tightening is going the hurt the economy in the long run. Monetary Base report revealed an increase to 6.1% from the previous value of 5.9% which was expected to decrease to 5.7%. The positive market sentiment encouraged consistent JPY gains. Tomorrow, Japan's Household Spending report is going to be published which is expected to increase to 1.2% from the previous value of -1.6% and Average Cash Earnings is expected to increase to 1.0% from the previous value of 0.8%.

Meanwhile, JPY is likely to sustain the gains amid optimistic expectation of the upcoming economic reports. On the other hand, AUD is affected by the risk aversion sentiment and weak economic reports that may lead to further weakness of AUD. If Japan presents better-than-expected economic data, the AUD/JPY will carry on with the downward trajectory.

Now let us look at the technical view. The price is currently quite impulsive amid the bearish pressure, leading the price below 82.00. On the back of the current price formation, the price is expected to pull back towards 82.00 area before pushing much lower 80.00 and later towards 78.50 area. As the price remains below 84.00 area, the bearish bias is expected to continue further in the coming days.

SUPPORT: 78.50, 80.00

RESISTANCE: 82.00, 84.00

BIAS: BEARISH

MOMENTUM: IMPULSIVE and VOLATILE

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The material has been provided by InstaForex Company - www.instaforex.com