AUD/JPY offered tone strengthens on weak 2017/18 Capex plans

AUD/JPY dropped to a session low of 86.93 after the Aussie first estimate for 2017/18 capex missed estimate.

Australia Q4 capex dropped 2.1% y/y, the data showed. Markets were expecting a drop of 0.5%. Meanwhile, private capital expenditure for 2017/18 is estimated at AUD 80.6 billion. This is well below the forecast of AUD 84.8 billion.

Aussie yields extend losses

The 10-year Australian government bond yield extended losses to 2.80% on the downbeat capex figures. The yield is down four basis points on the day. Meanwhile, its US counterpart is flat lined around 2.41%.

The weaker headline and forward looking capex figure saw the AUD/JPY pair tumble from 87.18 to 86.93. The cross was last seen trading around 87.00 levels.

Technical Levels

Breach of immediate resistance at 87.20 (1-hour 200-MA) would open doors for 87.53 (Dec 15 high), above which 88.17 (Feb 16 high) could be put to test. On the lower side, breach of support at 86.98 (1-hour 100-MA) could yield a sell-off to 86.67 (hourly chart support). A violation there would expose 86.30 (Feb 17 low).