AUD/JPY renews seven-year high near 97.50, focus on Japan GDP, RBA’s Lowe

• AUD/JPY prints six-day uptrend as it rises to the fresh high since January 2015.
• Risk-on mood favors the pair ahead of the key catalysts.
• Japan’s Q2 GDP, yields will be eyed for immediate directions.
• RBA’s Lowe will be traced for clear monetary policy guidance.

AUD/JPY clings to mild gains around the highest levels in seven years as it pokes 97.50 during the initial Asian session on the key Thursday. In doing so, the cross-currency pair rises for the sixth consecutive day amid a risk-on mood.

While the firmer sentiment favors the quote, anxiety ahead of Japan’s second-quarter (Q2) Gross Domestic Product (GDP), expected 0.7% QoQ versus 0.5% prior seems to test the bulls of late. Also important is a speech from Reserve Bank of Australia (RBA) Governor Philip Lowe.

The market’s risk-on mood could be linked to the recently firmer data from the US, Australia and Europe. Also favoring the sentiment could be a pullback in the US Treasury yields from the multi-day high, as well as the Fed’s Beige Book.

The Eurozone’s final reading of the Gross Domestic Product (GDP) rose by 0.8% QoQ in the three months to June of 2022 (Q2 2022) vs. 0.6% initial forecasts. That said, the YoY figures also improved to 4.1% in Q2 vs. 3.9% marked in the initial forecasts. On the other hand, US Goods and Services Trade Balance improved to $-70.7B in July from $-80.9B prior, versus $-70.3B forecasts. Further, the Good Trade Balance deteriorated to $-91.1B from $-89.1B marked in July.

On the other hand, Australia’s Q2 GDP rose to 3.6% YoY versus 3.5% market consensus and 3.3% prior while the QoQ figures eased to 0.9% compared to 1.0% expected and 0.8% previous readings.

Furthermore, the Fed’s Beige Book signaled a recovery in the supply chain and slowing price growth in nine of the 12 districts.

It’s worth mentioning that the chatters over the Japanese central bank’s intervention to defend the yen and the Bank of Japan’s (BOJ) favor for easy money, versus the RBA’s rate hikes, keep the AUD/JPY buyers hopeful.

Against this backdrop, Wall Street closed positive and the yields retreated, which in turn weighed on the gold price.

That said, a firmer print of Japan’s Q2 GDP may offer immediate pullback to the pair but the overall direction remains firmer unless RBA’s Lowe sounds too dovish.

Technical analysis

AUD/JPY brace for the late 2014 high near 98.40 unless declining back below May 2022 peak surrounding 96.90.