AUD/JPY retakes weekly 200-MA ahead of the Aussie CPI release

Yen selling has pushed the AUD/JPY cross back above the weekly 200-MA of 88.67 levels ahead of the release of the Aussie data, which could show the CPI growth slowed slightly in the second quarter. 

RBA’s trimmed mean CPI is seen rising 1.8% y/y in Q2 vs. the previous figure of 1.9%. The headline CPI is seen at 2.2% y/y vs. the previous figure of 2.1%. A better-than-expected CPI number would boost Aussie bond yields and strengthen the bid tone around the AUD. 

RBA’s Lowe speech due at 3:05 GMT

There is increasing risk that Lowe may attempt to talk the AUD lower by curtailing the mounting rate hike expectations. The ‘jawboning’ may not work if the CPI due at 1:30 GMT beats estimates. 

Yen under pressure

The Japanese has been offered in the overnight trade and in early Asia on signs of easing political uncertainty in the US. What hurt the Yen was also the exit of the dissenters at the BOJ. The new appointees favor large scale easing to boost inflation to 2% inflation target. 

AUD/JPY Technical Levels

An immediate resistance is seen at 89.03 (July 21 high) ahead of 89.32 (July 20 high). An end of the day close above the same would revive the June - July rally and shall open doors for 90.00 levels. The 14-day RSI is yet again flirting with the overbought territory. 

On the downside, a break below 88.76 (session low) would open up downside towards 88.52 (5-DMA) and 88.38 (10-DMA).