AUD/JPY buyers cheer nine-month high Aussie Retail Sales

• AUD/JPY traders near the weekly high, positive for the third day in a row, after Australia’s November month Retail Sales.
• Risk tone has recently been recovering amid mixed geopolitical signals concerning the US-Middle East issues.
• Japan’s Leading Economic Index, trade/political headlines will be in focus.

AUD/JPY takes the bids around 75.20, after marking the intra-day high of 75.29, during early Friday. The pair recently benefited from Australia’s November month Retail Sales and market’s risk recovery.

Australian Retail Sales crossed a 0.4% forecast with an upbeat print of 0.9%. The retail sales growth is highest in eight months and might have benefited from ‘Black Friday’ sales. Earlier during the day, Australia’s December month AiG Performance of Services Index slipped to a five-month low of 48.7 versus 53.7.

Read: Aussie Retail Sales (Nov MoM): +0.9 vs +0.4 expected (AUD bullish)

The market’s risk sentiment has also contributed to the pair’s run-up. There have been mixed clues about the US-Iran issue, not to forget the fresh signs of Iraq-Syria fight near the border. Even so, the market’s risk tone seems to have recovered with the US 10-year treasury yields rising to 1.86% with the S&P 500 Futures registering 0.15% profits to 3,281.

The US President is now using the global push to investigate Iran’s hand behind the Ukrainian flight crash. However, the US lawmakers’ efforts to limit the Republican leader’s power to use the military against Iran further tame the risk of war.

The US-China phase-one trade deal is near to signing in a ceremony on January 15 but US President Trump prefers waiting for the election outcome before signing the phase-two deal. Also challenging to the risk sentiment could be an expectedly tough start to the phase-two deal negotiations that are likely to start soon.

Having witnessed the upbeat outcome of the Aussie data, markets will now observe Japan’s Preliminary reading of November month Leading Economic Index, expected 90.6 versus 91.6, for immediate direction. Though, major attention will be given to trade/political headlines concerning the current risk-sensitive environment.

Technical Analysis

21-day SMA near 75.55 limits the pair’s immediate upside ahead of 76.00 and late-December tops near 76.60. On the downside, a 200-day SMA level of 74.85 holds the key to pair’s declines towards December month low near 73.80.