AUDJPY Outlook Jan 28 – Feb 1

• AUDJPY Outlook Jan 28 – Feb 1

Australia added 21,600 jobs in December to push the unemployment rate to 5 per cent, the lowest level since June 2011. However, most jobs added were largely part-time employment, suggesting wage growth will remain subdued in the near-time.

Weak consumer spending, rising household debt, a Chinese slowdown and weak consumer prices are key factors weighing on Australian dollar’s outlook. Still, slack in the labour market was reduced in December and the likelihood of the Reserve Bank of Australia to maintain or even raise rates by the end of the year received a little boost.

Read market outlook for Jan 28-Feb 1

Japanese Yen, on the other hand, failed to sustain its gains after Bank of Japan left its monetary policy unchanged and lowered its 2019 inflation outlook to 0.9 percent, down from 1.4 percent previously predicted. Indicating the world’s third-largest economy may be running out of options.

AUDJPY plunged from 83.88 to 77.23 amid the U.S-China trade war but rebounded slightly after a temporary agreement was reached. Again with the uncertainty surrounding the Yen outlook in 2019, especially now that the BOJ is unlikely to raise interest rate anytime soon and the fact that the Australian dollar is currently oversold, I will expect Australian positive consumer prices to aid the attractiveness of AUDJPY above 79.20 resistance levels. A sustained break of that level should open up 81.18. I remain bullish in the near-term and will look to buy above the 79.20 resistance.

However, if Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer failed to make progress on trade negotiation later this weak, AUDJPY will be forced below the 79.20 in the main time. A positive outcome should further boost price.