• Immediate trend-line restricts upside attempt.
  • 75.23/33 horizontal support crucial to watch.

Following a short-term descending trend-line, the AUD/JPY pair is taking rounds near 75.90 during early Thursday.

The failure to clear immediate resistance signal brighter chances of the quote’s pullback to 75.60 immediate support. However, 75.33/23 support-area comprising lows marked since January 04 gains major market attention.

Should there be additional downside under 75.23, 23.6% Fibonacci retracement of December 2018 to January 2019 downturn at 73.83 and January bottom near 70.70 could flash on bears’ radar.

In a case where prices manage to clear 76.00 resistance-line, 76.40 may entertain buyers ahead of questioning them by 21-day simple moving average (SMA) at 77.00 now.

If trade sentiment remains positive past-77.00, 50% Fibonacci retracement near 77.40 and 78.10 could lure optimists.

AUD/JPY daily chart

Trend: Bearish

The Nikkei Asian Review, a Japanese daily, carried a story on Thursday, citing that the US is not wanting to open up another front in the trade war.

This comes in light of the US President Trump’s visit to Japan next week from Saturday 25 May through to Tuesday 28th.

Key Highlights:

“Trade will not be the focus of U.S. President Donald Trump's upcoming trip to Japan, a senior U.S. administration official told reporters Wednesday.

In effect dropping a previously floated goal of clinching a quick trade deal by the end of May.

A senior White House official … "I don't think that the purpose of this trip is to focus on trade," the official said.”

  • Higher than expected build in inventories join the absence of fresh Geopolitical threat from the US-Iran front to trigger the latest decline.
  • PMI and trade developments will be in the focus.

Having touched $61.00, WTI is little positive from it's one week low to $61.30 during early Thursday. The black gold previously declined after weekly inventory report for the US registered larger than expected build while the absence of fresh negatives from the US-Iran front also played their role.

The US crude oil stocks grew past -600K forecast to 4.7 million barrels in the week ending May 17, the Energy Information Administration (EIA) report said on Wednesday.

There have been fewer headlines concerning the geopolitical tension between the US and Iran after the US President Donald Trump showed readiness to talk with Iran when it's ready. However, Reuters reported that Iran’s Supreme Leader Ayatollah Ali Khamenei said that Iran’s youth will witness the demise of Israel and American civilization, which in turn signal dark days ahead.

Adding to the energy benchmark’s downside could be on-going trade tension between the US and China. Recently, the Trump administration is likely to add Chinese companies to its blacklist and has turned down any plans to visit Beijing soon.

While qualitative catalysts are likely to keep driving energy prices, a slew of purchasing manager index (PMI) from Australia, Eurozone, and the US may offer intermediate direction to the quote.

Technical Analysis

A decline under 50-day simple moving average (SMA) highlights the March month top near $60.30 as immediate support ahead of pushing bears towards $60.00 and then to 100-day SMA level of $58.10.

Meanwhile, an upside clearance of $62.20 SMA barrier could trigger the rise targeting recent highs near $63.80 and $64.00 with an area including early April highs around $64.70/80 likely being buyers favorite then after.

New Zealand’s dairy giant, Fonterra, in a statement to NZ stock exchange, forecasted the 2018-19 milk price at NZD 6.30-6.40 per kg of milk solids versus the prior forecast was NZD 6.30-6.60.

Further Details:

Forecast financial year 2019 earnings per share to 10-15 cents vs. 15-25 cents previously.

The company cited the following reasons for the downward revision:

Recovery in key markets slower than expected.

Tightening price relativities between non-reference and reference products.

On-going challenges in Australia.

Amid increased Reserve Bank of Australia (RBA) June rate cut bets, in the wake of the recent dismal Australian jobs and construction output data, the Australian 10-year government bond yields dropped 4 bps to hit fresh record lows at 1.59%

Despite falling Australian yields, the AUD/USD pair manages to hold steady near 0.6880 levels, consolidating post-FOMC uptick to 0.6890.

The spot keeps its range trade intact, as all eyes remain on the US-China trade developments heading into a fresh batch of US macro news and Fedspeak due later today.

  • Challenges to the PM May’s position weigh on the British Pound (GBP).
  • Lack of data could keep highlighting political news as a major catalyst.

Despite growing speculations over the UK PM May’s resignation, GBP/USD pulls itself back from the lowest since mid-January to 1.2665 during the initial Asian session on Thursday.

The Cable dropped yesterday even if the headline consumer price index (CPI) grew more than 1.9% prior to 2.1% on a yearly basis. The core CPI remained unchanged at 1.8% YoY.

The reason could be fresh threats to the British Prime Minister Theresa May’s position. Even if PM May tried pleasing UK lawmakers with her 10-point Brexit proposal, the leaders showed fury and demanded immediate resignation from her as the new document is almost same and emphasize on the second referendum.

While the leader of House of Commons, a Tory member Andrea Leadsom, resigned after the drama, concerns are mounting that Mrs. May will quit by Friday, as expected by the UK Times.

With the absence of major economics/data from the UK, investors may keep concentrating on political news for fresh impulse.

On the other hand, the US Dollar (USD) remained mostly strong as FOMC minutes refrained from conveying anything positive while risk-off remained in play.

Technical Analysis

Unless clearing January 15 low of 1.2670, chances of witnessing 1.2710 again on the chart are less likely. Also, February bottom around 1.2770 and 1.2800 could entertain buyers afterward.

On the contrary, 1.2600, 1.2480 and January month low near 1.2430 are expected numbers of the sellers’ radar during further south-run.

New Zealand’s (NZ) Finance Minister Grant Robertson was on the wires earlier today, via Reuters, making his pre-budget speech.

Key Comments:

New Zealand government to shift to a net debt target range.

NZ will target debt of 15 to 25% of GDP from FY 2021/22.

Debt range to give the government more flexibility.

The UK Times report that the British Prime Minister Theresa May is preparing to quit her position after latest cabinet mutiny over her Brexit proposal.

The news report that some of her allies say that the PM May will announce her departure on Thursday. Latest departure of House of Commons’ leader Andrea Leadsom was also mentioned in the piece.

The GBP/USD pair gives less care to the news as it witnesses pullback during early Asian session on Thursday.