AUD/JPY: Break above 74.50 elusive despite strong Aussie and China data

AUD/JPY is having a tough time establishing a secure foothold above 74.50 despite the better-than-expected macro data releases in Australia and China. 

To start with, Consumer spending, as represented by Retail Sales, rose by 16.9% in May, beating expectations for a 16.3% rise and having declined by 17.7% in April. The strong rebound was likely fueled by revenge spending following month-long coronavirus-induced lockdown restrictions. 

Meanwhile, China's Caixin Services PMI jumped to 58.4 in June versus expectations of 49.9 and up from preceding month's reading of 55. A reading above 50 represents expansion. So, a jump to 58.4 from 55 is indicative of faster expansion in the service sector. 

While both data sets point to quick recovery from the virus-induced slowdown, the AUD is struggling to extend gains beyond 74.50. The pair's inability to produce bid gains could be associated with fears of the second wave of the virus outbreak. 

Australian state of Victoria reported 66 new cases on Thursday following Wednesday's count of 77. Meanwhile, coronavirus cases increased by more than 50,000 on Thursday, surpassing the previous single-day records set earlier in the week of 52,789.

At press time, the pair is trading at 74.44, representing marginal gains on the day, having put in a low of 74.32 early Friday. 

Technical levels