AUD/JPY retreats to 94.00 on softer Australia Consumer Inflation Expectations, concerns over China

• AUD/JPY reverses the previous day’s gains amid cautious optimism, downbeat Aussie data.
• Australia Consumer Inflation Expectations eased to 5.9% from 6.3% in August.
• US tariff chatters, covid fears in China test buyers despite US inflation-led market optimism.
• Yields, risk catalysts are important for clear directions amid a light calendar.

AUD/JPY holds lower grounds near the intraday low surrounding 94.00 after Australia’s Consumer Inflation Expectations eased during August. In addition to the Aussie data, challenges to the sentiment also exert downside pressure on the cross currency pair.

The latest release of Australia Consumer Inflation Expectations dropped to 5.9% in August, versus 6.3% prior. The Aussie data tracks the US Consumer Price Index (CPI) that declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior, which in turn joins the latest economic fears signalled by the Reserve Bank of Australia (RBA) to challenge AUD/JPY bulls.

On the other hand, fears surrounding Australia’s largest customer China also weigh on the AUD/JPY prices. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in mainland on August 10 versus 444 a day earlier, also weigh on the pair.

Amid these plays, S&P 500 Futures print mild gains near 4,120 by the press time after Wall Street rallied and the US Treasury yields remained mostly unchanged the previous day.

Moving on, a light calendar requires AUD/JPY traders to concentrate on the risk catalysts, mainly surrounding China, for fresh impulse.

Technical analysis

Despite the latest pullback, AUD/JPY sellers need to break the 50-DMA support surrounding 93.85 to retake control. On the contrary, an upside break of the latest peak of 94.42 should lure bulls.