AUD/JPY EXTENDS RECOVERY BEYOND 91.00 ON BETTER-THAN-FORECAST AUSSIE RETAIL SALES, RBA IN FOCUS

AUD/JPY picks up bids to refresh intraday high, extends bounce off two-week low.

Australia Q4 Retail Sales contract less than expected, second-tier data arrive upbeat.

Sour sentiment exerts downside pressure on the risk-barometer pair.

Chatters surrounding the next BoJ leader, risk catalysts will be eyed directives ahead of RBA.

AUD/JPY renews intraday high near 91.40 as Australia Retail Sales dropped less than forecast in the fourth quarter (Q4). Adding strength to the recovery moves could be the broad Japanese Yen (JPY) weakness due to the firmer US Treasury bond yields. However, challenges to sentiment probe the cross-currency pair traders ahead of Tuesday’s Reserve Bank of Australia (RBA) Monetary Policy meeting.

Australia’s fourth quarter (Q4) Retail Sales dropped 0.2% QoQ versus -0.6% expected and prior increase of 0.2%. Earlier in the day, TD Securities Inflation for the nation rose to 0.9% MoM from 0.2% prior, as well as to 6.4% YoY versus 5.9% previous readouts, during January.

Elsewhere, the US 10-year Treasury bond yields remain firmer for the third consecutive day, to 3.56% by the press time, following the biggest weekly jump since late September 2022. The underlying reason for the same could be linked to the firmer US employment and activities data.

Alternatively, talks surrounding the Bank of Japan’s (BoJ) next Governor and recent fears surrounding the US and China ahead of this week’s US diplomat visit to Beijing seem to challenge the risk profile and the AUD/JPY pair buyers. It’s worth noting that the S&P 500 Futures print mild losses and the stocks in the Asia-Pacific region are mildly offered to portray the sour sentiment.

Technical analysis

A daily closing beyond the 200-day Exponential Moving Average (EMA), around 91.60 by the press time, becomes necessary for the AUD/JPY bulls to retake control.