AUD/JPY retakes 87.00 handle, eyes China trade data

AUD/JPY found takers at the 5-DMA level of 86.88 and rose to a high of 87.21 levels this Thursday morning in Asia. The cross was last seen trading around 87.12 levels; up 0.30% on the day. 

Focus on China data

China data due at 03:30 GMT is expected to show the trade surplus widened to $42.44 billion in June from the previous month’s figure of $40.81 billion. In CNY terms, the surplus is seen falling slightly to 273 billion from 282 billion. 

A bigger trader surplus and a sharp rise in the commodity imports could bode well for the Aussie and risk assets in general (negative for Yen). 

Bank of Canada’s (BoC) hawkish rate hike not only marks a shift in the global monetary policy stance, but also underscores the fact that the Yen is a ‘sitting duck’ amid rising global rates environment, mainly due to BoJ’s yield curve control policy. 

AUD/JPY Technical Levels

A break above 87.26 (Wednesday’s high) would expose resistance at 87.49 (Mar 15 high) and 88.18 (Feb 16 high). On the other hand, a break below 86.88 (5-DMA) could yield a sell-off to 86.57 (10-DMA) and 86.48 (4-hour 50-MA).

Area above 87.00 had made life difficult for the AUD/JPY bulls in December - March period. It remains to be seen if the cross is able to end the week above 87.00 handle this time. Also take note of the large inverse head and shoulders pattern on the weekly chart.