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AUD/JPY holds gains near 113.20 after China data disappoints
China’s July retail sales rose 0.6% year over year and industrial production grew 4.5% year over year, but strategists said upcoming Australian labor releases are unlikely to change RBA rate pricing.
AUD/JPY extended gains for a second straight day, trading around 113.20 in European hours Monday, even as economic data from China came in weaker than expected, FXStreet reported. China’s National Bureau of Statistics showed July retail sales growth of 0.6% year over year, below the 1.5% forecast and down from June’s 1.0%.
Industrial production rose 4.5% year over year, missing both the 5.0% consensus estimate and the prior 5.3% reading, while fixed asset investment contracted 6.7% year to date year over year, deeper than June’s 5.7% decline and worse than the 6.2% expectation.
An NBS spokesperson said extreme weather was behind much of the growth headwind, while Brown Brothers Harriman expected this week’s Australian labor market releases to have limited impact on policy expectations. The bank said the Australian Q2 wage price index due Wednesday and the July labor force survey on Thursday are unlikely to shift RBA rate pricing, with forecasts pointing to wages rising 0.8% quarter over quarter and 3.2% year over year.
FXStreet also noted that upside for AUD/JPY may be capped by strength in the Japanese yen after softer Japanese GDP. Japan’s Q2 GDP grew 0.3% quarter over quarter, slowing from 0.5% in Q1, and rose 1.1% year over year versus expectations of 2.0%, complicating the Bank of Japan’s path toward policy normalization, according to MUFG.