AUD/JPY on the defensive as Asian shares slip, S&P futures report losses

• AUD/JPY – the risk barometer – is reporting losses in Asia, tracking the decline in the Asian stock markets.
• The S&P 500 futures are also reporting a 0.30 percent drop.
• Momentum studies remain biased toward the bears.

Currently, the AUD/JPY pair is trading at 79.60 – down 0.25 percent on the day – having clocked a high of 79.78 earlier today.

The currency pair, widely considered as a risk barometer, is reporting losses, likely due to risk aversion in stock markets. For instance, MSCI's broadest measure of Asia-Pacific shares outside Japan is flashing a 0.30 percent drop, possibly due to lingering trade concerns and US rate outlook.

Further, the S&P 500 futures are down 0.33 percent as of writing, meaning Friday's corrective bounce could end up being a dead cat bounce.

The risk-off tone is likely pushing the anti-risk JPY higher and the AUD, a risk currency, lower. Further, the PBOC announced a weaker CNY fix, possibly adding to the bearish pressure around the AUD.

Looking ahead, the AUD/JPY could suffer a deeper drop if the stock markets across the globe suffer a deeper drop.

The technical studies are biased toward bearish. For instance, momentum studies – 5, 10, and 21-day EMAs – are trending south. The RSI is holding below 50.0 0- in bearish territory.

AUD/JPY Technical Levels

Resistance: 79.82 (5-day EMA), 80.16 (Friday's high), 80.60 (Oct. 10 high)

Support: 79.04 (Oct. 11 low), 78.68 (Sept. 7 low), 78.00 (psychological support)