Demand for the Australian dollar is stronger in the mid-Asian session this Wednesday (7/22). The Australian dollar managed to survive against the Japanese Yen and held around 76.25 despite disappointing Australian data some time ago. Data on retail sales decreased lower than previously predicted.

With the recent rise in demand for the Australian Dollar, bringing the AUDJPY pair surged towards its highest point last June 8. Unfortunately, after a while, investors remembered the increase in cases in Australia which continued to increase. 

The possibility of a bullish Australian Dollar position was greatly entertained by the increase in AUD demand over the past four days amid the risk of global markets. Some time ago, Aussie retail sales data reported recovered only at + 2.4% lower than the initial prediction of 7.1%. 

Meanwhile, the data is also very much worse than last month's report which was + 16.9%. Although lower than predicted, the currency of the Kangaroo Country seemed to ignore all that. Unfortunately, the bullish.

Australian Dollar is currently still threatened by many global problems including the Aussie domestic problem. Given to date the number of cases of Coronavirus in Australia, especially in Victoria has not experienced improvement. The number of cases continues to grow and based on the latest report the increase reached 400 new cases. The risk challenge also comes from the increasing number of cases in the US.

AUD Movements Get Stimulus Encouragement from the US Economy

Meanwhile, the risk-on impulse came from hopes of even greater economic stimulus from the US. Earlier the European Union had reached an agreement of 750 Billion Euros stimulus to restore the region's economy. The next AUDJPY movement will probably remain focused on the dynamics of global risk. 

Considering the main data in the Asian region have been missed. Demand for the Australian Dollar rose sometime after the release of the RBA meeting results. With the increase, it succeeded in bringing the AUDJPY pair up 10 pips towards the 75.40 exchange rate which is the peak of the past six weeks. 

Some time ago the Australian central bank made a statement that negative interest rates might not be needed at this time. Earlier in Q2 2020, the central bank had cut interest rates to the lowest point at 0.25%. 

Together with the very low-interest rate policy, the RBA also released an asset purchase program when the stock market crashed. Many investors are very worried about the economic recession. Thus impacting on the collapse of the stock market and forcing the RBA to channel bond purchases.

Decline Facing AUD

To date, based on the meeting of the past few hours, the RBA considers that there is no need for action on the stimulus that was carried out yesterday. Interest rates have not changed and the target level of Treasury yields in 3 years has also remained. 

All this will only be adjusted again if there is progress in the full-time employment sector and also the inflation rate as expected. In the end, what was conveyed by the RBA was able to bring the Australian Dollar up. 

Eliminate all speculation that the RBA will impose negative interest rates because the economy continues to fall. Keep in mind at this time the 3-year Aussie Treasury yields are already above the target of 0.25%. But until now the RBA has also not pushed for higher bond purchases. If the yield continues to record an increase it will press the momentum of the Australian Dollar to rise. 

So that the currency of the Kangaroo country could again record weakening against the safe-haven of the Japanese Yen. The Australian Dollar fell after the Aussie employment data was reported with disappointing results. With that decline, it managed to bring the AUDJPY currency pair down again bearish to 74.80.