AUD/JPY keeps pullback from 200-DMA amid mixed clues

• AUD/JPY remains pressured, on the way to post fifth weekly loss.
• Virus updates battle risk-on mood, stimulus headlines to confuse traders.
• Australia infections jumped to August high, Japan plans to add more prefectures for emergency.
• Second-tier Japan, Aussie data and risk catalysts will be the key.

AUD/JPY edges lower despite the recent pick-up around 81.00 during the early Asian session on Friday. The cross-currency pair stepped back from the 200-DMA the previous day after market sentiment improved but the covid updates from Australia and Japan came out bleak. Also weighing on the pair could be the mixed data from Tokyo and Canberra.

With Sydney’s infections jumping back to March 2020 levels, the national count rallies to the highest since August 2020, forcing the government to take tough measures to contain the local infections.

On the other hand, Japan’s covid numbers cross the 10,000 mark for the first time and push the policymakers to re-think emergencies in more prefectures. Japan’s Kyodo News quotes anonymous government sources in this regard while saying, “The government is planning to add three prefectures neighboring Tokyo, as well as Osaka Prefecture, to areas under the COVID-19 state of emergency amid a resurgence of the coronavirus.” Furthermore, the US traces unvaccinated people as it cautiously eases the activity restrictions.

It should be noted that the downbeat US data and positive performance of equities portrayed the market optimism on Thursday. Behind the moves could be soft US numbers backing the need for further stimulus and infrastructure spending talks in the American Senate.

Amid these plays, S&P 500 Futures print mild losses by the press time even as its Wall Street counterpart refreshed record top before closing on the positive side.

Moving on, Japan’s preliminary reading of June’s Industrial Production and Australia’s Private Sector Credit, as well as Producer Price Index (PPI), data may offer intermediate direction to AUD/JPY prices. However, risk appetite related headlines will be more important to follow for fresh impulse.

Technical analysis

Failures to cross 200-DMA and a descending resistance line from July 13 highlight the AUD/JPY pair’s underlying weakness. However, the bears remain unconvinced before the pair refreshes monthly low under 79.84.