AUDJPY bounced off a key support zone earlier in the week, with the Australian dollar finding some bids after stronger than expected Chinese manufacturing data and the yen weakened as investor sentiment improved. Also, AUDJPY was starting to look oversold from a technical perspective.
Data watching
While it has been a very quiet day in Asia today, things are going to heat up again next week. There is a slew of important economic data due out of Japan, including inflation figures for April. This will be the Bank of Japan’s first look at how consumer prices are responding to last month’s hike in the sales tax. At its policy meeting earlier this week the BoJ reiterated that it will be closely monitoring the impact of the higher sales tax on the economy and it stands ready to ease further, if needed to foster growth and inflation. Another thing to watch out for is a speech by BoJ Governor Kuroda on Wednesday.
In Australia, Q1 capital expenditure figures are due to released, with the market expecting a headline decrease of 1.9% over the quarter. More importantly, the market will analyse the investment intentions of corporates in Australia. With mining related investment in Australia expected to dwindle, the market is looking to the rest of the economy to pick up the slack. There has been a general improvement in economic conditions this year in Australia, but the economy remains fragile, hence the RBA is expected to keep monetary policy at an accommodative level for some time to come. The question is: how long?
Key levels to watch in AUDJPY:
Support:
• 93.30 – 100day SMA
• 92.85 – 200day SMA
Resistance:
• 94.35 – prior high
• 94.75
• 95.25
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