AUD/JPY fades bounce off three-week low above 80.00 ahead of Aussie Employment

• AUD/JPY struggles to extend recovery moves from monthly bottom.
• Market optimism takes a breather ahead of the key Aussie data.
• AUKUS headlines entertain traders amid a quiet trading session.
• Australia employment figures for August bear downbeat forecast, challenging pair bulls.

AUD/JPY defends corrective pullback from a three-week low while taking rounds to 80.20 during a subdued start to Thursday’s Asian session. In doing so, the cross-currency pair not only portray the market’s general inactivity but also highlights the cautious mood ahead of the key Australian employment data for August.

Upbeat market sentiment, amid receding hopes of the Fed’s tapering and vaccine hopes, underpins the AUD/JPY pair’s latest recovery moves.

Traders anticipate the US Federal Reserve (Fed) to refrain from their hawkish bias over dialing back the easy money after the headline Consumer Price Index (CPI) data came in softer for August. The easing of inflation follows the downbeat employment figures and raise bars for any monetary policy adjustments the next week event as the Fedspeak has been positive.

Further, Australia and Japan accelerate their vaccine drives to tame the firmer covid infections. The same should have favored the pair buyers as global equities and US Treasury yields printed gains on Wednesday.

On the contrary, the US security pact with Australia and the UK hints at increasing geopolitical tension between China and the Western friends as signaled per the Financial Times (FT). “The US has launched a new trilateral security partnership with London and Canberra that will enable Australia to build a fleet of nuclear-powered submarines, a move that will strengthen the allies’ ability to counter China,” said the news.

Additionally, fears of a downbeat Aussie employment report for August and covid woes challenge the AUD/JPY buyers.

Amid these plays, S&P 500 Futures print mild gains by the press time after Wall Street closed positive.

Moving on, expected dip in the Australia Employment Change, -70K versus the previous +2.2K, as well as a higher Unemployment Rate print of 4.9% versus 4.6%, can weigh on the AUD/JPY prices. Also likely to challenge the pair’s upside moves are the geopolitical fears and COVID-19 chatters.

Technical analysis

20-DMA surrounding 80.50 caps AUD/JPY bounce off July month’s bottom near 79.85-80. The same join the bearish MACD signals and likely negative jobs report to keep sellers hopeful.