AUD/JPY – regional risk barometer strengthens after strong China data

Better-than-expected Chinese second quarter GDP and monthly industrial production and retail sales data release pushed up AUD/JPY cross, which indicates improvement in the risk sentiment in Asia.

Nears 81.00 handle

The cross clocked a high of 80.97 after China’s first quarter GDP came-in at 6.7% y/y beating the estimated figure of 6.6%. Industrial production and retail sales for the month of June printed higher than estimates as well.

The positive surprise strengthened the offered tone around the funding currency Yen and helped Aussie recover losses. AUD/JPY, often viewed as a regional risk barometer, thus jumped to near 81.00 levels. European desks may take cues from the rise in AUD/JPY and respond positive to China data.

AUD/JPY Technical Levels

A break above the immediate hurdle of 81.17 (100-DMA) could yield a rally to 81.58 (Brexit day high). A violation there would expose 200-DMA level of 83.34 levels. On the other hand, breakdown of support at 80.35 (July 12 low) would expose psychological support at 80.00 levels (zero figure). A violation there could yield a move lower to 79.60 (5-DMA).