AUD/JPY snaps five-day uptrend above 81.00 as covid woes renew in Australia

• AUD/JPY bounces off intraday low but prints daily loss for the first time in six days.
• NSW refreshes highest covid infections since March 2020, Victoria ends lockdown.
• Bears also cheer US Senators’ jostling over President Joe Biden’s infrastructure spending proposal, cautious mood ahead of the key data/events.
• BOJ’s Kuroda, RBA’s Debelle and risk catalysts will be crucial for fresh impulse.

AUD/JPY struggles to keep the bounce off intraday low of 81.32, down 0.13% on a day, snapping a five-day uptrend during Tuesday’s Asian session. The cross-currency pair portrays the market’s latest risk-off mood as the coronavirus headlines from Australia come negative.

Although Victoria stays on the path to end the local lockdown tonight, per Aussie timings, a jump in the New South Wales (NSW) infections to the highest in 15 months, recently to 175 per the ABC News, becomes a concern for the Aussie authorities. With this, Australia’s total count of daily covid cases jumped to a fresh high since September 2020.

It’s worth noting that the indecision over US President Joe Biden’s $1.2 trillion proposal of infrastructure spending and the market’s cautious mood ahead of this week’s Federal Open Market Committee (FOMC) meeting also weighs on the sentiment. That said, a reduction in the week-start numbers and record closings of the Wall Street benchmarks pleased market optimists the previous day.

It’s worth noting that China’s Industrial Profits for June also eased from 36.4% to 20.00% YoY and exerts additional downside pressure on the AUD/JPY prices. Furthermore, Tokyo’s holding of Olympics, amid a jump in infections at home, also keeps the pair sellers hopeful.

Amid these plays, S&P 500 Futures drop 0.15% intraday whereas the US 10-year Treasury yields stay mildly bid around 1.28% by the press time.

Looking forward, speeches from BOJ Governor Haruhiko Kuroda and RBA Assistant Governor Guy Debelle will be offering short-term directions to the AUD/JPY pair, mostly southwards. However, major attention will be given to the coronavirus updates and the US-China tussles, not to forget political jitters in Japan, for fresh direction.

Technical analysis

Failures to cross 38.2% Fibonacci retracement of one-month fall starting from late June, around 81.25, directs AUD/JPY sellers toward the 81.00 threshold.