- AUD/JPY trades 0.12% higher on the day at 77.36.
- Australia’s Business Confidence bettered estimates but remained fragile.
- Japan’s weak GDP could keep the anti-risk yen under pressure.
AUD/JPY continues to trade in the green above 77.30 after National Australia Bank’s Business Confidence index for August came in better-than-expected.
The index improved to -8 in August from July’s -14 instead of an expected decline to -22. However, the Business Conditions Index fell to -6 in August from July’s 0, missing the expected rise to 2 by a significant margin. As such, the AUD is struggling to extend gains on the improvement in the Business Confidence numbers.
However, more substantial buying pressure may emerge during the day ahead, as the futures tied to the S&P 500 are currently pointing to the risk-on sentiment with a 0.7% gain.
The Japanese yen is also likely to remain under pressure, courtesy of the dismal Japanese economic data released early Tuesday. Japan’s gross domestic product contracted an annualized 28.1% from the previous quarter in the three months through June, compared to the initial estimate of a 27.8% fall, the Cabinet Office reported Tuesday.
The biggest economic slide since 1995 comes when Japan’s ruling party is preparing to pick up a new prime minister following Shinzo Abe’s resignation on the grounds of health concerns.