AUD/JPY recovers from 7-month low despite sluggish China Caixin PMI data
- AUD/JPY pulls back from January lows even after China’s Caixin Services PMI slips below forecast.
- Trade/political pessimism and slump in Iron Ore were previously dragging the quote down.
Despite witnessing weaker than forecast China Caixin Services PMI, AUD/JPY recovers from seven-month low while taking the bids to 71.80 during the early Asian session on Monday.
China’s July month Caixin Services PMI slipped well below 52.9 forecast to 51.6, highlighting a weakness in the activity gauge of Australia’s largest customer.
Earlier during the day, activity indices from the AiG and the Commonwealth Bank, followed by TD Securities Inflation and ANZ Job Advertisements flashed mixed signals concerning the health of the Australian economy.
With Chinese media showing the dragon nation’s ire over the US President Donald Trump’s tariff hike, the Australia Dollar (AUD) slumped across the board. Also adding the downside pressure on the pair is global fears surrounding monetary easing at major central banks and geopolitical tension surrounding Iran.
Additionally, a slump in the prices of Iron Ore, Australia’s biggest export, could also be considered as an extra reason for the pair’s overall downpour since early-day.
Global risk gauges, like the US 10-year treasury yield and Germany’s 30-year bond yield, keep sending signs of economic pessimism considering the fresh trade war between the US and China.
Given the absence of major data up for publishing, investors will keep an eye over trade/political news for fresh direction.
Technical Analysis
While break of June 2016 low of 72.40 opens the door for the pair’s plunge towards yearly low of 70.71 and following south-run in the direction to 70.00 round-figure, oversold levels of 14-day relative strength index (RSI) might trigger the pair’s pullback towards June month low of 73.92 if price regain their stand above 72.40.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
