AUD/JPY jumps 50 pips on strong Aussie data

• Aussie retail sales blow past expectations.
• AUD finds bids, AUD/JPY jumps to a session high of 87.84.

The AUD/JPY pair rose 50 pips to a session high of 87.84 after the Aussie November retail sales increased 1.2 percent month-on-month. Markets were expecting a 0.4 percent rise in retail consumption.

A better-than-expected data seems to have pushed the 10Y AU-Japan yield spread higher to 266 basis points (spread was 262 basis points yesterday). Consequently, the Aussie dollar is solidly bid and may extend the gains further.

As of writing, the currency pair is trading well above the 23.6% Fibonacci retracement of the Jan. 5-Jan. 10 sell-off) and looks set to test 87.93 (confluence of 38.2% Fibonacci retracement and downward sloping 1-hour 50-MA).

AUD/JPY Technical Levels

A break above 87.93 (38.2% Fibonacci retracement + downward sloping 1-hour 50-MA) would open up upside towards 88.15 (50% Fibonacci retracement) and 88.19 (1-hour 200-MA). On the downside, a violation at 87.65 (23.6% Fibonacci retracement) could yield a re-test of 87.31 (pre-data low) and 87.21 (Jan. 10 low).