AUD/JPY dips mildly today as Australia Dollar pulls back broadly. This is in response to China’s new hostile trade action in banning Australian coals. Though, the retreat in AUD/JPY is shallow so far and doesn’t warrant a reversal yet. Further rise will remain in favor as long as 77.09 resistance turned support holds.
Still, we’d emphasize that the real test lies in long term channel resistance (started back at 105.42 in 2013). Sustained break there will be a strong signal of an emerging bullish trend and pave the way to 61.8% projection of 59.89 to 78.46 from 73.13 at 84.60 in the medium term. However, rejection by the channel resistance, followed by break of 77.09 support, will retain long term bearishness and turn focus back to 73.13 support.
USD/CNH staying in consolidation after strong China data, down trend in force
China’s industrial production rose 7.0% yoy in November, up from October’s 6.9% yoy, matched expectations. Retail sales rose 5.0% yoy, up from October’s 4.3% yoy, but missed expectation of 5.1% yoy. Auto sales rose 11.8% yoy while household appliances sales rose 5.1% yoy. Communications equipment sales even jumped 43.6% yoy. Fixed asset investment rose 2.6% ytd yoy, up from October’s 1.8% ytd yoy, beat expectation of 2.6%. Private sector fixed-asset investment rose 0.2% ytd yoy, turned positive from October -0.7%.
USD/CNH recovers mildly today as consolidation form 6.4960 extends. Downside momentum has been diminishing as seen in 4 hour MACD. But outlook stays bearish as long as 6.5968 resistance holds. The down trend from 7.1953 medium term top should still extend to 61.8% retracement of 6.0153 to 7.1953 at 6.4661. There we’d expect strong support to bring a sustainable corrective rebound.