AUD/JPY retreats towards 95.00 on downbeat Aussie PMI, Japan inflation eyed

• AUD/JPY takes offers to refresh intraday low after Australia’s PMIs for July.
• Australia’s preliminary S&P global PMIs for July dropped below market forecasts and prior.
• BOJ couldn’t help yen, Aussie benefited from mildly positive market sentiment.
• Japan’s National Consumer Price Index for June, risk catalysts will be important for fresh impulse.

AUD/JPY slides towards 95.00, down 0.10% intraday near 95.15 during Friday’s initial Asian session. The cross-currency pair posted a corrective pullback around 95.60 the previous day but the bears returned to the table on downbeat Australia data, not to forget the fears of recession.

Australia’s S&P Global Manufacturing PMI eased to 55.7 in July versus 56.2 prior and 56.4 expected. Further, the S&P Global Services PMI dropped to 50.4 during the stated month compared to 55.0 market consensus and 52.6 prior. Further, the S&P Global Composite PMI also declined to 50.6 versus 52.6 previous readouts.

Bank of Japan (BOJ) announced no change in its monetary policy the previous day while keeping the benchmark rate unchanged at -0.10% while keeping the target rate for the Japanese Government Bonds (JGBs) at 0.0%. However, fears of firmer inflation and challenges to growth, as signaled in the BOJ’s quarterly Outlook Report appeared to have weighed on the Japanese yen.

It’s worth noting that the risk-on mood appeared to have favored the AUD/JPY, due to its risk barometer status. The upbeat sentiment could be linked to the resumption of gas flows from Russia’s Nord Stream 1 pipeline, as well as the European Central Bank’s (ECB) new tool called the Transmission Protection Instrument (TPI) to tame disorderly market dynamics in the bloc.

Amid these plays, Wall Street benchmarks closed firmer and the US Treasury 10-year Treasury yields marked the biggest daily slump in five weeks. That said, S&P 500 Futures drops 0.40% by the press time.

Moving on, Japan’s National Consumer Price Index (CPI) for June, prior 2.5% YoY, could offer immediate directions. However, major attention will be given to the risk catalysts for fresh impulse.

Technical analysis

AUD/JPY remains mildly positive while trading between a weekly support line around 95.25 and a three-month-old horizontal resistance near 95.75.