AUD/JPY drops 30 pips on weak Aussie data, yield differential hits 4-month low

• AUD dropped on evidence of anemic consumption as represented by dismal retail sales print.
• 10Y AU-Japan yield spread or differential fell to 4-month low in AUD-negative manner

The offered tone around the AUD gathered pace, pushing the AUD/JPY pair lower to 1-hour 200-MA level of 87.58 after the ABS data showed the retail sales growth stalled in September.

As of writing, the cross currency pair is trading 87.64 levels. September retail sales printed at 0.0% m/m, missing the estimated rebound to 0.4% from the previous month's -0.5% reading. Traders are likely to pare back RBA tightening expectations on account of the weak consumption data.

Ahead in the day, the AUD/JPY cross is likely to remain on the back foot as the 10-year Aussie-Japan bond yield differential hit to 4-month low of 253 basis points.

AUD/JPY Technical Levels

The 1-hour chart shows a bullish 50-MA and 200-MA crossover, although the 200-MA is still sloping downwards. Thus, a break below 87.58 (1-hour 200-MA) could yield a sell-off to 87.34 (1-hour 50-MA) and 87.00 (zero levels). On the other hand, a move above 87.75 (Nov. 2 low on 1-hour chart) would expose 88.10 (Nov. 2 high) and 88.31 (Aug. 2 high).