AUD poised for upside on positive Chinese data

AUD/JPY will be the one to watch today, with macroeconomic data possibly nudging the currencies in opposite directions.

Australian currencies
Source: Bloomberg

This morning, Japan released its Q2 GDP flash estimates which showed  the economy had shrunk the most since 2011, at -6.8% year-on-year and -1.7% month-on-month.

The decline was largely expected due to April’s sales tax hike, but overall the figures were a touch better than market forecasts.

On the news, AUD/JPY edged up higher and the pair was further supported by some positive data from Westpac consumer sentiment and wage price index.

Consumer confidence improved for a third straight month with a reading at 98.5, while wage price growth was largely in line with analysts’ forecasts.

 

Click to enlarge

 

Coming up at 1.30pm (Hong Kong and Singapore time), we’ll get a round of Chinese data where the market is expecting an improvement in industrial production, fixed asset investment and retail sales. Following last week’s figures, where we saw a record high trade balance and stellar export numbers, investors will be looking for reconfirmation of China’s growth momentum.

If the Chinese data does come in positive or above expectations, the AUD/JPY could see further upsides.

The pair is currently hovering above a key support zone around its 200-day simple moving average (SMA).

On a longer term basis, any rising geopolitical risks could see investors head back to safe haven assets like the yen, which could hold back the pair.

 

 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.