AUD/JPY regains bid tone as BOJ calls for additional monetary easing

AUD/JPY is mildly bid this Friday morning in Asia as the BoJ summary of opinions stressed the need to further stimulate the aggregate demand by additional monetary easing so as to counter the impact of consumption tax hike (scheduled in Oct 2019).

At press time, the cross is trading at 88.38 levels; up 0.18% on the day. The pair hit a 9-day low of 88.01 yesterday.

Hovers below weekly 200-MA

The weekly 200-MA stands at 88.41. Bulls would want to see the pair end above the key moving average for the third straight week, although it is easier said than done, given the confluence of multiple technical levels around 88.41.

The Japanese data released this morning was mixed. Japan August core consumer prices rose 0.7% y/y, marking an eighth consecutive month of yearly increases, according to Reuters. Retail sales increased 1.7% last month compared with the previous year, missing a median estimate for a 2.6% rise. Industrial production data, however, beat forecasts. August figures showed an increase of 2.1% compared with the previous month, above the 1.9% median forecast.

Investors are likely to focus on the fact that BOJ's call for more easing makes the Yen a sitting duck in the current rising global rates environment. Thus, AUD/JPY looks set to end above the weekly 200-MA for the third straight week, unless the stock markets turn risk averse.

AUD/JPY Technical Levels

A break above 88.45 [38.2% Fib R of Nov 8 low - Sep 21 high + 4-hour 100-MA] would expose 88.64 [resistance on 4-hour], above which the pair is seen running into 4-hour 50-MA located at 88.96. On the downside, breach of support at 88.16 [session low] would open up downside towards 87.88 [50% Fib R] and 87.68 [50-DMA].