AUD/JPY stays depressed above 93.00 on downbeat Australia PPI, Retail Sales data ahead of BoJ

• AUD/JPY fades bounce off intraday low after Australia PPI, Retail Sales disappoints Aussie bulls.
• Australia Q2 PPI eases to 0.5% QoQ, Retail Sales contracts 0.8% MoM in June.
• Risk-negative headlines about US-China ties, pullback in yields and JPY’s strength ahead of BoJ weigh on prices.
• BoJ is expected to keep the monetary policy unchanged but may tweak YCC measures and propel Yen.

AUD/JPY justifies downbeat Australian data, as well as the cautious mood ahead of the Bank of Japan (BoJ) Monetary Policy Meeting, around 93.30 amid early Friday. In doing so, the cross-currency pair prints mild losses at the lowest levels in seven weeks marked the previous day, printing a three-day downtrend by the press time.

Australia Retail Sales slumps 0.8% MoM in June versus 0.0% expected and prior growth of 0.7%. It should be noted that the second-quarter Producer Price Index (PPI) data have been disappointing with 3.9% YoY and 0.5% QoQ figures.

Also read: Australian Retail Sales drop 0.8% MoM in June vs. 0% expected

That said, the quote slumped the most in five weeks the previous day after news from Nikkei signaled that the BoJ may edit its +/- 0.50% limit for the 10-year Japanese Government Bond (JGB) yields in today’s monetary policy announcements. The talks of a likely change in the BoJ’s Yield Curve Control (YCC) policy propelled the JGB to the highest levels in three months after Tokyo inflation.

Earlier in the day, the Statistics Bureau of Japan released monthly prints of the Tokyo Consumer Price Index for July. The details suggest that the headline Tokyo CPI improves to 3.2% YoY from 3.1% prior, versus 2.8% market forecasts, whereas the Tokyo CPI ex Fresh Food, Energy rises to 4.0% from 3.8% previous readings. More importantly, Tokyo CPI ex Fresh Food eases from 3.2% to 3.0% for the said month compared to analysts’ estimations of 2.9%.

Elsewhere, fears of fresh US-China tension due to the White House's readiness to stop the Hong Kong Leader from attending November’s Asia-Pacific Economic Cooperation (APEC) leaders’ summit in San Francisco seem to also exert downside pressure on the AUD/JPY.

Even so, the S&P500 Futures print mild gains and the US 10-year Treasury bond yields ease from a three-week high after making the biggest daily jump in a month, to 3.99% by the press time.

Looking ahead, AUD/JPY will pay attention to the BoJ moves for clear directions as the YCC tweak could favor the bears.

Technical analysis

A daily closing below the four-month-old rising support line, now immediate resistance near 93.85, directs AUD/JPY towards 91.95-90 DMA confluence comprising 100 and 200 moving averages on the daily chart.