AUD/JPY condolidates around 84.00 level after substantial slide last week

• AUD/JPY has seen a subdued start to the week, barely budging from the 84.00 level.
• Monday’s calm marks a significant shift from last week’s volatility.

It’s been a very mundane start to the week for AUD/JPY, with the pair largely sticking to within a few pips of the 84.00 level for most of the session. The currency pair did manage to squeak out a fresh multi-week lows under 83.80 at the Asia Pacific reopen of trade on Monday, but lacked the conviction to extend on the hefty losses incurred last week.

To recap last week’s price action; the pair tanked from highs around 86.00 to lows current levels around 84.00 (a near 2.5% drop) as a result of 1) a dovish showing from the RBA, where Governor Philip Lowe pushed back strongly against expectations for rate hikes in 2022 and 2) a broader paring back on hawkish central bank bets across developed markets (which benefits the yen, given there were no hawkish bets on the BoJ to pare back on in the first place). As of the time of writing, the pair is sat just to the north of the 84.00 level. The most notable upside resistance is at 84.50 (last Tuesday and Wednesday’s lows), while to the downside the next support is the 200-day moving average just to the south of the 83.00 level.

Chinese trade data for October was released over the weekend and came in mixed. Exports beat expectations, but imports missed. Given that China is a big export destination for Australian goods, this is likely to be interpreted as a net negative for AUD, although FX markets didn’t show much of a reaction. Analysts read the weaker than expected import data as further signs that Chinese growth momentum continues to weaken. Elsewhere, the Bank of Japan released the Summary of Opinions from the most recent policy meeting, which offered up few surprises and also did little to stir the FX pot.

AUD/JPY traders arriving for the upcoming Tuesday Asia Pacific session should keep an eye on Japan September trade, current account and bank lending figures scheduled for release at 2350GMT, the Australia October NAB Business Confidence survey at 0030GMT and the Japan October Eco Watchers Survey at 0500GMT.