- AUD / JPY extends losses after China reports sharp drop in consumer spending.
- Chinese industrial production increased in April, but failed to submit an offer under the AUD.
- The risk tone in the S&P 500 futures contracts likely adds to the downward pressure.
The AUD / JPY went from 69.33 to 69.26 following the publication of Chinese data at 1:30 GMT, extending the decline from the session high of 69.53 observed at the beginning of Asia.
China’s industrial production rose 3.9% year over year in April, up 1.1% from -1.1% in March. While factory activity has grown at a faster rate, consumer spending, Retail sales, declined again.
Retail sales fell 7.5% in April against expectations of a 7% drop, after falling 15.8% the previous month. The AUD therefore finds it difficult to applaud the rise in Chinese industrial production.
Downward pressure could also come from the risk tone of US equity futures. At the time of publication, S&P 500 futures are down 0.30%. Index futures increased by almost 0.20% at the start of Asia.
Wall Street performed positively on Thursday in hopes of an additional fiscal stimulus package. White House adviser Larry Kudlow was out on Thursday evening, saying the US economy could witness a “V” recovery. The policymaker, however, said the president was not in favor of a general stimulus package, but more inclined to provide aid to states linked to the pandemic.
Kudlow’s comments likely dissipated futures on the S&P 500 and growth-linked currencies like the Australian dollar. The AUD / JPY pair could suffer greater losses if the risk of tone observed in the American equity futures contracts infiltrates the Asian indices, which are currently trading in a mixed manner.
As Australia seeks to reopen its economy, fears of a recession are on the rise and could weigh on you AUD. The Big Four Australian Banks – Commonwealth Bank, Westpac, National Bank of Australia and ANZ Bank – have set aside nearly $ 5 billion in bad debt and bad debt provisions caused by the pandemic and are ready for the recession, according to the Sydney Morning Herald.