AUD/JPY is quiet NYE market conditions and despite a miss in the Chinese PMIs
- AUD/JPY is currently trading at 77.80 from a low of 77.60 and a high of 77.92
- AUD/JPY was moved all of 10 pips by the release of the Chinse PMIs'.
Official PMI data from China for December 2018 arrived at 49.4, moving into 'contraction' for the first time since July of 2016 vs the expected 49.0 and prior 50.0
The non-manufacturing for December came in at 53.8 vs. expected 53.2. This data is not going to give the bulls a leg to stand on and casts a negative outlook for the start of 2019.
Going into the New Year, China faces not just a slowing economy but also a protracted trade war with the US. What investors are fearing the ost, however, it is the amount of piled up debt that threatens the global economy along with the Chinese financial system - The Chinese face either painful reforms or pushing headline growth beyond traditional levers. Economic growth is expected to slow to 6.3% next year, after reaching 6.6% in 2018 while the nation's expanded by 6.5% in the third quarter, the country’s worst quarter since 2009.
As for the Aussie, it trades as a proxy to China's and commodities performance and the yen side of the cross tracks risk appetite making the pair a risk barometer for the FX space; The pair will likely be in vogue for the start of 2019.
AUD/JPY is flat around the pivot, consolidating with the broader trend intact, leaving a bearish bias on the charts. S3 is located down at 76.83 However, the bears broader target is down at 75.29 as the 161.8% Fibo extension of the recent downside and range between Oct lows and Dec highs.