AUD/JPY: Holding above 74 despite the slide in Chinese industrial profits
|- AUD/JPY remains mildly bid above 74.00, possibly due to trade optimism.
- China's industrial profits fell by 9.9% year-on-year in October.
AUD/JPY continues to trade above 74.00 despite the horribly weak China data.
Profits of industrial firms in the world's second-largest economy fell 9.9% in October from a year earlier to CNY 427.56 billion, having dropped 5.3% decline in September, the National Bureau of Statistics data showed.
The data underlines the negative impact of the ongoing US-China trade war on corporate profitability.
Even so, the AUD, a proxy for China, is showing little signs of stress. The AUD/JPY pair, a risk barometer, has barely moved following the release of the China data and remains mildly bid at 74.07.
The pair's resilience is not surprising. After all, the Chinese slowdown is generally accepted by now and priced in. Also, optimism on the trade front is likely helping the AUD avoid losses. President Trump on Tuesday said the United States and China were close to agreeing on the first phase of a trade deal.
That said, the bid tone around the anti-risk JPY will likely strengthen if the equities turn red, pushing the AUD/JPY pair back below 74.00. At press time, the futures on the S&P 500 are trading flat-to-negative.
Technical levels
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