AUD/JPY extends bounce off weekly low to 90.00 after RBA MPS, China PMI

• AUD/JPY picks up bids to stretch the previous day’s bounce off one-week low after key data, events.
• RBA MPS/SoMP portrays hawkish bias among the Aussie central bank officials.
• China’s Caixin Services PMI for April eases to 56.4 versus 56.5 expected and 57.8 prior.
• Cautious optimism in the markets ahead of the key US, Canada employment numbers favor pair buyers.

AUD/JPY pierces the 90.00 psychological magnet as it stretched the previous day’s rebound from a one-week low after upbeat outcomes from Australia and China during early Friday. Adding strength to the risk-barometer pair’s recovery moves could be the mildly positive sentiment in the market ahead of the US and Canada jobs report. However, holidays in Japan restrict the cross-currency pair’s immediate moves.

In its quarterly Monetary Policy Statement (MPS), the Reserve Bank of Australia (RBA) showed readiness for further rate hikes and defend hawks after surprising markets with a 0.25% rate lift earlier in the week. Also positive for the AUD/JPY pair were the upbeat economic forecasts and statements citing inflation fears in the Pacific major, not to forget hopes for China’s upbeat economic growth. It’s worth noting that the RBA’s MPS is also known as the Statement on Monetary Policy (SoMP).

Also read: RBA Monetary Policy Statement: Further rate hikes may be needed

On the other hand, China’s Caixin Services PMI for April eases to 56.4 versus 56.5 expected and 57.8 prior. Earlier in the week, China’s Caixin Manufacturing PMI for April dropped to 49.5 versus 50.3 expected and 50.0 prior while the official NBS Manufacturing PMI offered a negative surprise before the Chinese markets went on a long holiday until Thursday.

On a different page, US banking sector woes join looming default fears to challenge the market sentiment. However, recent actions from the US policymakers and comments suggesting no immediate fears of the banking crisis seemed to have joined the Federal Reserve’s (Fed) dovish hike to allow the bears to take a breather ahead of the key US Nonfarm Payrolls (NFP) data.

While portraying the mood, S&P 500 Futures print mild gains even if Wall Street benchmarks closed in the red. Further, the US Treasury bond yields ended Thursday’s North American session on the downside but an absence of Japanese traders limit bond market moves in Asia.

Having witnessed the initial reaction of the RBA MPS and China data, the AUD/JPY pair traders should concentrate on the qualitative factors amid a lack of major data from Australia and holidays in Japan. With this, the latest risk catalysts surrounding the US banking fallouts, debt ceiling expiry and pre-NFP caution will be in the spotlight.

Above all, the contrasting bias of the RBA and the Bank of Japan (BoJ) officials keeps the AUD/JPY pair on the bull’s radar.

Technical analysis

Thursday’s Dragonfly Doji candlestick joins the AUD/JPY pair’s rebound from the 50-DMA, around 89.45 by the press time, keeping the buyers hopeful.