- AUD/JPY keeps losses after key data releases in Australia and China.
- Australia’s trade surplus narrowed more than expected in July.
- China’s Caixin Services PMI for August bettered estimates by a big margin.
AUD/JPY is trading in the red near 77.80 following the release of Australia’s trade data and China’s service sector data. The pair, however, has trimmed losses.
Australia’s trade balance declined to A$ 4,607 million in July versus expectations for A$ 5,400 million and down from June’s surplus of A$8,202 million. Outbound shipments or export fell by 4% in July, following June’s 3% rise. Meanwhile, imports increased by 7% in July following June’s 1% rise. The data comes a day after Australia reported a 7% contraction in the second quarter – the biggest fall since records began in 1959.
While Aussie data missed estimates, China’s Caixin Services PMI for August came in at 54.00, bettering estimates for a decline to 50 from July’s 54.1 reading by a big margin. The upbeat PMI looks to be helping the AUD avoid deeper losses. The pair shed few pips to hit a low of 77.64 after the dismal Aussie data, only to recover to levels near 77.80 on the back of positive China data.
Looking forward, a continued recovery in the US dollar could play spoilsport. That’s because the safe-haven greenback fell by 10% in the past 5.5-months, as stocks rallied. As such, the rebound in the greenback could weigh over the risk sentiment and strengthen the bid tone around the anti-risk yen. Interestingly, the futures on the S&P 500 are currently down nearly 0.20% on the day. Also, tensions between China and the US could again come to the forefront, courtest of Washington’s latest decision to put several restrictions over Chinese diplomats’ in the US.