AUD/JPY trades modest losses below mid-96.00s, looks vulnerable near multi-week low

• AUD/JPY is down for the third day in a row and is falling to a multi-week low.
• Bullock’s Soviet comments from the RBA encourage the Aussie and support him on the cross.
• Bets on another BoJ rate hike in 2024 support the JPY and cap any further gains.

The AUD/JPY cross remains under some selling pressure for the third day in a row on Thursday and falls to a three-and-a-half-week low during the Asian session on Thursday. Spot prices are currently trading just below the mid-96.00s and look vulnerable to extending this week’s rejection slide from the 200-day simple moving average (SMA).

The Australian dollar (AUD) benefited from a minor boost following vociferous remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock, who said the board remains alert to risks to rising inflation and is not expected to be in a position to cut rates in the near term. That said, unimpressive Australian trade balance data showing the surplus widened to $6,009 million in July amid a 0.8% drop in imports and a 7% rise in exports keeps any significant movement in check of appreciation.

In addition, expectations that the Bank of Japan (BoJ) will raise rates again in 2024, supported by data showing that real wages in Japan rose for the second month in a row in July, continue to support the Japanese Yen (JPY) and to continue to contribute. to limit upside for the AUD/JPY cross. Moreover, BoJ Governing Council member Hajime Takata said the central bank needs to adjust monetary conditions in another gear if it can confirm that firms will continue to raise capital spending, wages and prices.

Meanwhile, the market’s cautious mood is seen as another factor benefiting the JPY’s relatively safe status against its Aussie counterpart. This in turn suggests that the path of least resistance for the AUD/JPY cross is to the downside and suggests that the recent good recovery is moving from near the psychological 90.00 mark or above a one-year low reached in August. it’s already sold out.