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  • AUD/JPY drops despite better than forecast China inflation data.
  • Australia’s NAB Business Confidence/Conditions lag behind previous.
  • Risk tone remains up as the US-China trade optimism counters geopolitical tension.

AUD/JPY fails to respect China’s upbeat inflation numbers as it declines to 73.70 during early Tuesday.

China’s Consumer Price Index (CPI) and Producer Price Index (PPI) for August beat market consensus as the headline CPI rose above 2.6% to 2.8% (YoY) while also crossing 0.5% consensus with 0.7% MoM figure. Further, PPI YoY fell lesser than -0.9% expected to -0.8%.

Also on the economic calendar are Australia’s August month National Australia Bank’s (NAB) Business Confidence/Conditions numbers. Both the sentiment figures mark 1 against prior of 4 by the Business Confidence and 2 by the Business Conditions.

Trade sentiment has been upbeat off-late with the US President Donald Trump’s latest comments confirming a talk in the next week, ahead of the key October meeting. The US Treasury Secretary Steve Mnuchin recently said to plan for discussing currencies at the US-China meet.

At the geopolitical front, Brexit uncertainties prevail as the United Kingdom’s (UK) Parliaments are now closed for five weeks to mid-October with a law restricting no-deal departure for three months but the Prime Minister (PM) Boris Johnson refrains from requesting any Brexit extension to the European Union (EU).

Elsewhere, North Korea test-fires two unidentified projectiles, even after showing readiness to talk with the US during the previous day, whereas the US shows readiness to slap fresh sanction on Turkey due to its purchase of Russia aircraft.

With this, risk tone remains positive and the US 10-year treasury yields extend previous advances to 1.654% by the press time.

Given the absence of Australia/Japan data left for publishing, investors will keep an eye over the trade/political headlines for fresh impulse.

Technical Analysis

A sustained trading beyond 73.85, comprising a downward-sloping trend-line since April 17, will propel the quote further upwards to 100-day exponential moving average (EMA) level of 74.60, failing to do so can fetch the quote back to 50-day EMA level near 73.25 whereas 72.60/62 support-confluence including 23.6% Fibonacci retracement of April-August downpour and 21-day EMA.