AUD/JPY erodes 40-pips rapidly, despite positive equities

The cross in AUD/JPY came under fresh selling pressure post-Tokyo open, reversing the entire overnight recovery to now trade back near the midpoint of 86 handle.

AUD/JPY sold-off near 86.90 once again

A solid improvement seen in the Japanese manufacturing PMI data boosted the Yen across the board, knocking-off the cross sharply lower, as the USD/JPY pair retreated quickly from four-day tops of 109.83 levels.

Japan’s Nikkei flash manufacturing PMI rises to 3-month highs in August

The latest leg down in AUD/JPY can be also attributed to persisting selling seen in the AUD/USD pair, as tumbling commodities’ prices overshadow any optimism build from higher Asian stock markets. The resource-linked Aussie tends to suffer from broad based sell-off in commodities.

Hence, the losses in the risk barometer, AUD/JPY points towards a major turnaround in risk conditions, as we progress towards the mid-Asian session. In the day ahead, the manufacturing PMI reports from the Euroland and US will provide some fresh trading impetus, while broader market sentiment will continue to drive markets ahead of the Jackson Hole Symposium.

Technical Levels

Higher side: 86.62/69 (5-DMA/ daily pivot), 86.95/87 (10-DMA/ round number), 87.23 (50-DMA)

Lower side: 85.93 (Aug 18 low), 85.37/33 (200 & 100-DMA), 85 (key support)