AUD/JPY drops to 10-day MA on horribly weak China data
- AUD/JPY fell to the 10-day MA support of 72.04 on weak China data.
- China's industrial production and retail sales growth slowed sharply in July.
A weaker-than-expected China data released at 02:00 GMT pushed the AUD/JPY lower to the 10-day moving average support of 72.04.
China consumer spending, as represented by retail sales, rose to 7.6% year-on-year in July, missing the forecasted rise of 8.6% by a big margin. The retail sales rose by 9.8% in the preceding month.
Meanwhile, industrial production growth slowed to 4.8% year-on-year in July, also missing the expected rise to 5.8% and down from the preceding month's print of 6.3%.
The slowdown in the industrial production is hardly surprising, given the world's second-biggest economy is embroiled in a trade war with the US.
What's more concerning is that consumer spending is weakening and so the Chinese economy could see a deeper slowdown in the near future.
As a result, the path of least resistance for the AUD, a proxy for China, is to the downside.
So far, the downside in the AUD/JPY has been restricted at the 10-day MA support of 72.04. The support, however, could be breached during the day ahead if the risk aversion worsens, courtesy of dismal China data.
As of writing, the pair is trading at 72.16.
Pivot points
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
