AUD/JPY struggles to defend 95.00 amid firmer yields, risk-off mood

• AUD/JPY remains sidelined after the previous day’s lackluster move.
• Yields remain firmer around the highest levels since late June.
• Downbeat Aussie PMI contrast further Japan data, chatters over policy change at BOJ to exert downside pressure.
• China’s Caixin Manufacturing PMI, risk catalysts are crucial for fresh impulse.

AUD/JPY stays defensive around 95.15 as the 10-DMA challenges the latest downside momentum amid Thursday’s sluggish Asian session. Even so, softer Aussie data and risk-aversion keep the pair sellers hopeful.

Recently, the final readings of Australia’s S&P Global Manufacturing PMI for August dropped below 54.5 initial estimates to 53.8. Before that, the nation’s AiG Performance of Manufacturing Index marked the first activity contraction in seven months with 49.3 numbers, versus 52.5 prior, for the said month.

On the other hand, Japan’s Industrial Production for July improved to -1.8% YoY versus -2.6% expected and -2.8% prior. Further, Retail Trade numbers for the said period also grew 2.4% YoY compared to 1.9% market forecasts and 1.5% prior.

It’s worth noting that Bank of Japan (BOJ) monetary policy board member Junko Nakagawa recently mentioned on Wednesday that he hopes to discuss policy change in September based on data available.

Elsewhere, the chatters surrounding another ship blocking the moves in Suez Canal joined pessimism over China’s covid conditions, downbeat statistics and tussles with the US over Taiwan appear to weigh on the market sentiment of late, which in turn favor AUD/JPY sellers.

On the same line are the concerns about a global recession and the central bankers’ aggression that weigh on the pair prices.

Amid these plays, Wall Street closed with losses while the US 10-year Treasury yields rose the most in two weeks while rising to the highest level since late June. That said, the S&P 500 Futures drop 0.36% intraday by the press time.

Moving on, China’s Caixin Manufacturing PMI for August may entertain AUD/JPY traders ahead of the next week’s monetary policy meeting of the Reserve Bank of Australia (RBA). The event becomes more important this time considering the latest weakness in the data.

Technical analysis

The 10-DMA level near 94.95 probes the AUD/JPY pair’s downside break of a two-week-old ascending trend line, around 95.70 by the press time.