AUD/JPY slides towards 91.00 on downbeat Australia GDP, inflation figures

• AUD/JPY takes offers to add to previous pullback from one-week high after upbeat Aussie GDP.
• Australia Q4 GDP eased to 0.5% QoQ versus 0.8% expected and 0.6% prior, monthly CPI eases for January.
• Market sentiment remains depressed as yields regain upside momentum after sluggish end to February.
• China PMIs, BoJ talks and risk catalysts eyed for clear directions.

AUD/JPY drops to 91.36 while refreshing the intraday low on lower-than-expected Aussie economic growth during early Wednesday. In doing so, the risk-barometer pair also takes clues from the market’s sour sentiment amid hopes of higher rates and worsening inflation fears. With this, the cross-currency pair also pays little heed to the dovish bias surrounding the Bank of Japan (BoJ), as signalled by the incoming policymakers’ latest speeches.

Australia’s fourth-quarter (Q4) Gross Domestic Product (GDP) figures came in lower than expected 0.8% and 0.6% prior readings while flashing 0.5% quarterly growth. The yearly GDP growth, however, matches 2.7% market consensus, down from 5.9% prior. On the same line is the nation’s monthly Consumer Price Index (CPI) data for January as it dropped to 7.4% versus 8.0% expected and 8.4% prior.

Also read: Breaking: Aussie data dump crashes AUD/USD

Earlier in the day, Australia’s S&P Global Manufacturing PMI for February improved to 50.5 versus 50.1 analysts’ expectations.

Apart from the downbeat Aussie GDP, the market’s sour sentiment also weighed on the AUD/JPY pair. The same contradicts the dovish BoJ talks.

Risk profile remains weak during early Wednesday as the all-important March month begins, which comprises Federal Reserve (Fed) Chairman Jerome Powell’s testimony and the Federal Open Market Committee (FOMC) monetary policy meeting. It should be noted that the escalating fears of more supply crunch and inflation pressure also contribute to the risk-off mood.

While portraying the same, S&P 500 Futures track Wall Street’s mild losses whereas the US 10-year Treasury bond yields regain upside momentum targeting the 4.0% hurdle after witnessing a pullback late Tuesday.

Looking forward, China’s official activity data for February precedes Caixin Manufacturing PMI for the said month to direct intraday AUD/JPY moves. However, major attention should be given to the risk catalyst and the Bank of Japan (BoJ) talks as the incoming board struggles to defend the Japanese central bank’s ultra-easy monetary policy.

Technical analysis

A daily closing below the six-week-old ascending support line, now resistance around 92.00, keeps AUD/JPY bears hopeful of probing the previous monthly low surrounding 90.90.