AUD/JPY pays little heed to upbeat Australia Employment report as yields drop on Credit Suisse fears
- AUD/JPY remains pressured around intraday low, fades late Wednesday’s bounce off three-month low.
- Australia Employment Change, Unemployment Rate improved during February.
- Aussie Consumer Inflation Expectations ease to 5.0% for March.
- Yields remain pressured even as policymakers rush to placate fears emanating from Credit Suisse debacle.
AUD/JPY struggles to cheer the upbeat Aussie employment report for February during early Thursday as risk-off mood weigh on the cross-currency pair. Even so, the quote pauses the initial fall near the intraday low of 87.83.
Australia’s headlines Employment Change jumps by 64.6K versus 48.5K expected and 11.5K prior while the Unemployment Rate also dropped to 3.5% from 3.7% previous readings and 3.6% expected.
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Earlier in the day, Australia’s Consumer Inflation Expectations eased to 5.0% for March versus 5.4% market forecasts and 5.1% prior.
It should be noted that the upbeat prints of Japan’s Machinery Orders for January, 9.5% MoM versus 1.8% expected and 1.6% prior, joins upbeat Merchandise Trade Balance Total of ¥-897.7B compared to ¥-1,069.4B analysts’ estimations and ¥-3,498.6B previous readings to also weigh on AUD/JPY.
Above all, the fears emanating from the Credit Suisse turmoil weigh on the AUD/JPY prices as yields drop. The Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. On the same line was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse, which in turn fanned the risk-off mood.
That said, the US 10-year Treasury bond yields dropped the most in four months before bouncing off a four-month low to 3.46% at the latest. On the same line, the US two-year bond coupons refreshed a six-month low before ending the volatile Wednesday near 3.89%.
Having witnessed the initial reaction to the Aussie employment data and Reserve Bank of Australia (RBA) Bulletin for the fourth quarter (Q4), AUD/JPY traders should pay attention to the risk catalysts and the yields for clear directions. Should the market’s risk aversion continue to drown the bond coupons, the cross-currency pair has more downside to portray on the chart.
Technical analysis
A clear U-turn from a three-month-old previous support line, around 90.15 by the press time, directs AUD/JPY towards late 2022 bottom surrounding the 87.00 threshold.