AUD/JPY drops to fresh 7-month low amid US-China tussle, all eyes on RBA
- AUD/JPY flashes fresh low since January amid rising safe-haven buying, cautious trading ahead of RBA.
- The US Treasury finally termed China a currency manipulator.
- The US-China trade tussles are now creating political tension and may weigh on Antipodeans.
With the Japanese Yen (JPY) surging on the US-China tension and the Aussie traders waiting for the RBA, the AUD/JPY pair declines to fresh low since January before taking rounds to 71.30 during early Asian morning on Tuesday.
The quote is on negative for the sixth consecutive day as political/trade tussle between the world’s two largest economies, including Australia’s biggest customer China, weigh on the Australian Dollar (AUD).
Having witnessed fresh trade tariffs from the US President Donald Trump, China recently retaliated by letting its currency weaken against the US Dollar (USD) and also instructed to stop using the US agricultural products.
Following that, the US Treasury Department released an official statement terming the dragon nation as the “currency manipulator”.
As a result, investors rushed towards the safe havens, like the Japanese Yen (JPY), in search of risk safety.
It should also be noted that the Australian Dollar (AUD) traders are also cautious ahead of the monetary policy meeting by the Reserve Bank of Australia (AUD) up for release at 04:30 GMT.
While present trade/political tussle can keep exerting downside pressure on the pair, likely absence of a rate cut during the RBA meeting may help the quote recover some of its latest losses. Additionally, June month Trade Balance, expected 6,000M against 5,745M, will precede the RBA and can offer intermediate moves to the pair.
Technical Analysis
January month low surrounding 70.71 becomes the next stop for the bears while 70.00 round-figure could please them afterward. Alternatively, oversold conditions of the 14-day relative strength index (RSI) might trigger the quote’s short-covering moves towards Friday’s low of 72.20 if managed to overcome today’s high surrounding 71.60.