AUD/JPY: Recovery stalls after China inflation data
- AUD/JPY trades at 76.47 versus 76.11 in early Asia.
- China's factory-gate deflation eased in August but fails to draw bids for the AUD.
- Risk-off looks to be capping the upside in the AUD/JPY pair.
AUD/JPY is struggling to draw bids despite signs of easing in factory-gate deflation in China.
The data released at 01:30 GMT showed China's Producer Price Index or factory-gate inflation fell 2% year-on-year in August, as expected, following July's 2.4% decline.
The Consumer Price Index rose 0.4% month-on-month in August as expected versus July's 0.6% rise. In annualized terms, consumer inflation rose 2.4%.
Fresh evidence of a slowdown in decline in factory-gate prices is good news for the Aussie dollar and other commodity-linked currencies. So far, however, AUD/JPY has had a tough time extending the pre-data recovery from 76.11 to 76.47.
The risk-off action in the global equities could be capping the upside in the AUD/JPY pair. The US stocks fell by over 2% on Tuesday, and the futures tied to the major European equity indices are currently reporting moderate losses.
Additional bearish pressure could be stemming from the negative news on the coronavirus vaccine front. As per the latest reports, AstraZeneca's COVID-19 vaccine trial has been paused due to an adverse reaction in a person. Also, reports that the US is considering banning some or all products made with cotton from China’s Xinjiang province could be playing spoilsport.
Technical levels