AUD/JPY Mildly positive above 73.50, takes clues from economic calendar

• AUD/JPY recently responded to the Aussie/Japan statistics.
• China’s coronavirus cases follow the footsteps of Hubei with a decline in infections, a rise in the death toll.
• Headlines from China will be the key driver.

AUD/JPY trades modestly positive while trading around 73.55 after Australia’s fourth quarter (Q4) Wage Price Index during early Wednesday.

The Aussie Wage Price Index for Q4 matched forecasts of 2.2% YoY and 0.5% QoQ growth and failed to offer any clear direction concerning Thursday’s Australian employment data.

Earlier during the day, Australia’s Skilled Vacancies for January rose from 0.6% prior to 0.7% whereas the Westpac Leading Index also grew to 0.05% versus revised down prior of 0.01%.

On the other than, Japan’s December month machinery orders registered larger than expected 9% drop to -12.5% mark on MoM basis while Merchandise Trade Balance flashed ¥-1312.6 B compared to ¥-1694.9 B consensus.

Coronavirus cases have recently started showing mixed signals as the numbers for infections continue to decline but the death toll increased. The latest figures from China Health Commission suggest coronavirus cases increase by 1,749 as of end February 18 but the death toll grew 136 from 98 the previous day. The same pattern of a rise in death numbers and a sustained pullback in infection cases was also observed while noticing numbers from the epicenter Hubei. The update states that there are 1,693 new cases on February 18 versus 1,807 of February 17. The report also mentions 132 new deaths compared to 93 noted the previous day.

Even so, China’s President Xi Jinping was spotted ignoring Moody’s downbeat growth forecasts despite coronavirus fears.

Investors will now keep eyes on updates from China for fresh impulse. It should also be noted that Beijing has started turning trade-positive towards the US off-late and hence any more development on that will also be followed closely. Furthermore, Thursday’s Aussie employment data will be the key after the RBA’s bearish minutes.

Technical Analysis

61.8% Fibonacci retracement of its October-December 2019 upside near 73.55, followed by a 200-day SMA level of 74.25, limits the pair’s short-term upside. Alternatively, February 07 low near 73.00 seems to be on the intra-day sellers’ radar.