AUD/JPY: Easing of China’s factory deflation fails to lift the Aussie dollar
- AUD/JPY remains in the red near 75.80 after upbeat China data.
- China's factory deflation eased for the second month in July.
- The CPI rebounded by 0.6%, beating forecasts for a 0.4% rise.
AUD/JPY isn’t finding any takers even though the data released soon before press time showed China’s factory deflation eased for the second straight month in July.
China’s Producer Price Index (PPI) or the gauge of factory-gate prices ticked higher to -2.4% year-on-year in July from June’s -3% reading, beating the forecasted decline of 2.5% by a narrow margin. Meanwhile, Consumer Price Index (CPI) came in at 0.6% month-on-month versus expectations for 0.4% and up from June’s -0.1% print. In annualized terms, the CPI rose to 2.7% from 2.5%.
The PPI figure improved for the second straight month, signaling a continued recovery in the world’s second-largest economy and the largest importer of commodities. Even so, the AUD is struggling to pick up a bid.
The AUD/JPY pair continues to trade near 75.80, representing marginal losses on the day.
Coronavirus concerns may be keeping the AUD bulls at the bay. As per Reuters, Australia’s second-most populous state, Victoria, reported its deadliest day of the coronavirus outbreak on Sunday, with 17 people dying and 394 new cases.
The dour economic forecasts published by the Reserve Bank of Australia (RBA) on Friday could also be the reason for the AUD’s lackluster response to the upbeat China data. The pair may suffer a deeper decline during the day ahead if the global equities drop on political deadlock in Washington and US-China tensions, strengthening the demand for the anti-risk Japanese yen.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
