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AUD/JPY bounces after Chinese data

Sentiment turned to bullish today, boosting commodity-linked currencies as stocks continued in their uptrend.

The AUD/JPY cross has enjoyed positive sentiment Monday and was trading half a percent higher during the London session, last seen at around 83.90.

Investors bought the Australian dollar after the latest batch of Chinese data, which surprised to the upside.

Chinese data spur demand for Aussie

Chinese retail sales rose to 4.9% year-on-year in October, up from 4.4% in September and well above the 3.5% expected by analysts. In addition, industrial production climbed to 3.5%, from 3.1% previously , also above 3.0% expected. Lastly, fixed asset investment declined from 7.3% to 6.1%.

Following the release of the October activity numbers, China’s National Bureau of Statistics (NBS) released a statement, via Reuters, expressing their take on the economy:

China’s economy maintained a steady recovery in October

  • .
  • Expects China’s economy to continue to recover, consumer inflation to remain mild.
  • Expects infrastructure investment to pick up as China rolls out key projects.
  • China’s employment situation gradually improving

Several macroeconomic indicators were released by Japan too, but it looks like they did not cause any volatility in the JPY.

Japanese industrial production stayed at -2.3% YoY in September, while capacity utilization worsened notably to -7.3% from 3.9% previously.

Later in the session, traders will pay attention to the New York Empire State Manufacturing Index for November, seen improving slightly to 21.60 from 19.80 in October.

The Australian dollar remains supported by the rising commodity prices as precious metals jumped to multi-month highs. At the same time, the WTI oil trades at 80 USD a barrel, the highest level since 2014.

Daily chart remains bullish

The Australian dollar declined recently, but that was to be expected, following the sharp rise since October. Nevertheless, the Aussie managed to defend the 200-day moving average below 83.00, therefore, the medium-term outlook still remains bullish.

The next target for bulls could be at 84.70, followed by the current cycle highs in the 86 region. The Australian dollar needs to close above 86 to confirm the long-term uptrend . In that case, we might see a rally toward the psychological 90 handle.

Alternatively, the support is at the mentioned 200-day moving average at around 82.80 (blue line on the chart), followed by another demand zone at previous lows near 82.25.

audjpy daily chart AUD/JPY daily chart, Source: Author´s analysis, tradingview.com

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