AUD/JPY seesaws around 68.70 after China’s GDP shrinks

• AUD/JPY registers mild losses following the mixed data.
• China’s GDP and Retail Sales remained dismal but Industrial Production offers a positive surprise.
• Updates on the cure to the pandemic, the US economic restart favor the risks.
• Japan Industrial Production and the coronavirus updates will be the key to watch, for now.

AUD/JPY drop from 68.70 to 68.60, currently around 68.66, after China data flashed mixed messages during early Friday. While GDP fell below -6.5% forecast to -6.8% on QOQ, better than expected -7.3% Industrial Production figures of -1.1% seem to confuse the traders.

Read: China’s GDP contracts 6.8% YoY in Q1 vs. -6.5% expected, AUD/USD little changed

Early in Asia, news that the clinical trials on the Gilead’s Remdesivir offer promising results fuelled the risk-on. The mood got additional support from US President Donald Trump’s expectations of the receding death toll while sharing guidelines to re-open the economy in a phased manner.

As a result, the US 10-year treasury yields reverse the previous day’s downside with more than seven basis points (bps) of gains to 0.683% while Australia’s ASX 200 surge to fresh four-year high by the press time.

Given the initial reaction to China data, traders will now focus on Japan’s Industrial Production for February, expected to remain unchanged at 0.4% on MoM, for fresh impulse. Even so, virus updates will remain as the key driver.

Technical analysis

Not only 50-day SMA level around 69.00 but February 28 low close to 69.37 also questions the buyers. On the downside, 21-day SMA near 66.90 limits near-term declines.