AUD/JPY holds modest gains, remains below 200-day SMA near 100.00

• AUD/JPY is receiving support from a combination of factors and is returning closer to a two-month peak.
• Ishiba’s comments on BoJ rate hikes overshadow upbeat domestic data and undermine JPY.
• Stronger Australian retail sales data boosts Aussie amid optimism over Chinese stimulus.

The AUD/JPY cross attracted buyers for the second day in a row on Tuesday and climbed to the 99.75-99.80 region during the Asian session, closer to a technically significant 200-day simple moving average (SMA).

The Japanese yen (JPY) continues to be undermined by comments from Japan’s new Prime Minister (PM) Shigeru Ishiba, saying the Bank of Japan’s (BoJ) monetary policy needs to remain accommodative to support a fragile economic recovery. In addition, Ishiba said on Monday that he plans to call a general election on October 27, which largely overshadows upbeat Japanese macro data and does little to provide a significant boost to the JPY.

A government report released earlier today showed Japan’s unemployment rate fell to 2.5 percent in August from 2.7 percent previously. Separately, a BoJ Tankan survey indicated that sentiment among major Japanese manufacturers was steady and a slight improvement in the mood of major non-manufacturers during the third quarter. Meanwhile, the BoJ Opinion Summary showed that the central bank will adjust its accommodative stance if economic conditions improve.

The Australian dollar (AUD), on the other hand, strengthened slightly after the release of domestic retail sales, which rose 0.7% in August, compared with a modest 0.1% increase in the previous month. This comes on top of the dovish stance of the Reserve Bank of Australia (RBA) and optimism over a slew of stimulus measures from China last week, which continues to benefit the Aussie and is proving to be a key factor acting as a headwind from behind for AUD. cross /JPY.

It remains to be seen, however, whether the bulls can build on the momentum or face rejection again near the psychological 100.00 mark amid growing market belief that the BoJ will raise interest rates again by the end of this year. Additionally, the formation of a “Death Cross” on the daily chart – the 50-day simple moving average (SMA) below the 200-day SMA – calls for caution before placing bullish bets around the AUD/JPY cross and position for additional earnings. .