AUD/JPY clocks fresh session high as China factory prices rise for a fifth month

Better-than-expected Chinese producer price index (PPI) helped the AUD/JPY cross extend gains to a fresh session high of 87.21 levels.

The cross had dipped to a low of 86.80, before an upbeat Aussie business confidence index saw the cross retake the 1-hour 50-MA level of 87.03

Global Reflation theme

The producer price index rose 6.9% in January from a year earlier, beating the estimate of 6.5% and way above the December figure of 5.5%. This means China is exporting inflation to the global economy. Aussie dollar and other risk assets are likely to cheer the reflation theme.

Meanwhile, the CPI rose 2.5%, which is slightly higher than the 2.4% rise expected by the economists.

The AUD / JPY cross was last seen trading around 87 levels. The risk-on action in the financial markets is likely to keep the Yen on the back foot.

AUD/JPY Technical Levels

The immediate hurdle at 87.21 (session high) if breached would expose 87.50 (previous day’s high), above which the psychological figure of 88.00 could be put to test. On the other hand, a breakdown of support at 86.80 (session low) could yield a pull back to 5-DMA level of 86.55 and 86.27 (10-DMA).