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  • AUD/JPY refreshes a one-week high before slipping below 75.50.
  • China’s NBS Manufacturing PMI beats 51.2 forecasts with 51.5 figures in September.
  • Market sentiment seesaws as the first round of US presidential debate begins.
  • China Caixin Manufacturing PMI, updates from the Democratic-Republican face-off will be the key.

AUD/JPY drops to 75.43 after China’s Federation of Logistic and Purchasing released NBS Manufacturing PMI data for September during early Wednesday. The Aussie cross earlier surged to the fresh high since September 22 while printing a three-day winning streak as market sentiment remained firm ahead of the US presidential debate.

Not only the headlines NBS Manufacturing PMI but the official prints of Non-Manufacturing PMI for the stated month also flashed notably welcome numbers of 55.9.

Read: China’s NBS Manufacturing PMI beats estimates with 51.5 in September

Other than the cautious sentiment due to the key event in the US, market’s mood also bears the burden of the World Trade Organization’s (WTO) authorization to the Europe for slapping a $40 billion tariffs on America. Furthermore, China’s inability to perform on the phase-one deal agreements and fears of the coronavirus (COVID-19) outbreak in Europe and the UK are additional challenges to the macro environment.

However, increasing odds of the Democratic candidate Joe Biden’s victory keeps the markets mildly positive amid hopes of further stimulus and a less confrontation to the rest of the world, except for China.

It should be noted that downbeat prints of Japan’s Preliminary Industrial Production for August, -13.3% versus -10.0% forecast, fail to play its role in dragging the Japanese yen (JPY0 down due to the market’s risk-off mood.

Against this backdrop, S&P 500 Futures portray 0.10% gains to 3,336 whereas stocks in Australia are down 1.20% by the press time. Further, Japan’s Nikkei 225 is also flashing a 0.33% loss as we write.

Looking forward, traders will keep eyes on the risk catalysts for fresh impulse while China’s Caixin Manufacturing PMI, expected to remain unchanged at 53.1, can offer extra direction to the pair.

Technical analysis

AUD/JPY regains important levels above 200-day and 100-day EMAs amid receding weakness of the bearish MACD. As a result, the latest pullback is less likely to be dangerous unless breaking down the 200-day EMA level of 74.07. Though, odds of the quote’s declines to 74.85 level comprising the 100-day EMA can’t be ruled out. Meanwhile, a joint of short-term EMAs around 75.80 becomes the strong upside barrier for the bulls to cross ahead of targeting a falling trend line from August 31, at 76.55.