AUD/JPY surges on Aussie GDP, China PMI snaps the leash
The AUD/JPY pairing leapt to 80.60 immediately following the Aussie GDP release, which showed an upside surprise for AUD bulls, posting a 0.9% q/q gain for Australia's headline GDP, hurdling over the forecast 0.7% and almost coming in on par with 2018's Q1 reading of 1.0%. On the flip side, China's PMI printed below expectations, cooling Aussie traders' celebrations slightly and taking the AUD/JPY back towards 80.40.
Despite obvious weak points within the domestic Australian economy, and continued external risks related to trade from abroad, the annualized growth rate for Australia clocked in at 3.4%, widely beating the anticipated 2.8%. The Australian economy is finally growing at a pace that meets the Reserve Bank of Australia's (RBA) desired target range, and Aussie bulls will be looking for hints of a hawkish stance change from the RBA in the coming weeks, which is currently looking down the barrel of a long-winded wait-and-see rut on interest rates.
China's Caixin Purchasing Manager's Index for the month of August printed at just 51.5, below the previous month's 52.8 and failing to stick to the forecast 52.7 landing. The Caixin Composite also dipped to 52.0 from the last reading of 52.3, indicating a continued slowdown in the rate of expansion, while the Caixin Services PMI also dropped to a ten-month low of 51.5 (forecast 52.6, previous 52.8). Economic growth in China continues to held steady despite worsening trade war waves with the US as another round of trade tariffs is expected to come due later this week, but the deepening trade stand-off is still having a blow-off effect on leading indicators as domestic markets in China brace for price shocks in the tariff run-off.
AUD/JPY levels to watch
While the Aussie-Yen marks in new highs for the week, the pair is still sharply off of recent highs, with resistance marked in at last week's high near 81.80, while 2018's lows remain close by at 79.50, and bulls will have their work cut out for them if they're going to manage a break back towards the year's hefty resistance zone from 83.25 to 84.50.