AUD/JPY extend declines below 74.00 after Japan GDP amid broad risk-off
- AUD/JPY struggles to stop the previous two-day declines despite downbeat Japan GDP.
- Chinese efforts to tame coronavirus impact seem to fail to placate traders.
- Downbeat growth figures from Japan ahead of the coronavirus month of Japan signal the worst is ahead.
AUD/JPY declines to 73.75, with the latest intra-day low of 73.70, following the release of Japan’s fourth quarter (Q4) GDP data during Monday’s Asian session.
Japan’s economy flashed an alarming signal even if the numbers are for the period prior to the Chinese contagion that is likely to have a negative impact on global economies. The preliminary numbers for Japan’s Q4 GDP suggest a 6.3% annualized contraction versus -3.7% expected. On the QoQ basis, the growth figures drop 1.6% compared to the -0.9% forecast.
Read: Japanese GDP SA (QoQ) Q4 -1.6% (est -1.0%; prev 0.1%; prev 0.4%)
While the figures should ideally weaken the Japanese yen, it actually boosted the JPY’s safe-haven demand after the release. The reason is the fears emanating from the global top-tier economy that has previously registered four consecutive quarters of growth. Also contributing to the risk-off could be the time period as the coronavirus started dominating from early January and hence if the Q4 releases are downbeat the worst will be ahead of Q1 2020 data.
While portraying the market’s risk-off, the S&P 500 Futures mark a mild gain worth of 0.11% to 3,385 by the press time.
In doing so, the risk barometer might have respected China’s latest efforts to increase public spending and announce corporate tax while also speeding up the import procedures for manufacturing equipment and medicos.
The latest figures from China’s Hubei province, the epicenter of coronavirus, suggest 1,933 new infected cases and 100 deaths by the end of February 16.
Moving on, the economic calendar has fewer signals and hence coronavirus headlines will remain in the spotlight. However, Australia’s key employment data on Wednesday and Thursday, Wage Price Index and Employment Change respectively, will be important to watch for the pair traders.
Technical Analysis
Friday’s bearish spinning on the daily chart keeps sellers hopeful on the downside break of 73.60 while targeting 73.00. On the upside, a sustained break of 21-day SMA, currently at 73.95, could challenge the monthly top near 74.30.