AUD/JPY approaches weekly highs at 94.30 after a mix China’s economic data

• AUD/JPY is marching towards its weekly high at 94.26 despite downbeat China’s GDP.
• The headwinds of the resurgence of Covid-19 have brought a slump in the Chinese economy.
• Lower Wage rates in Japan are responsible for the subdued Durable goods sales.

The AUD/JPY pair has refreshed its intraday high at 94.00 after the release of the mixed Chinese economic data. The Chinese economy is facing the headwinds of the resurgence of Covid-19 that has grown fears of lockdown curbs by the Chinese administration to contain the pandemic. Therefore, an outperformance was not expected by the market participants.

China's Gross Domestic Product (GDP) has remained vulnerable in the second quarter of CY2022. The quarterly GDP has landed at -2.6%, lower than the prior release of 1.3% and the expectations of -1.5%. Also, the annual figure has tumbled to 0.4% from the consensus and the former figure of 1% and 4.8% respectively. However, the Industrial Production data has improved to 3.9% vs. 0.7% reported previously but remains lower than the estimates of 4.1%.

And lastly, the Retail Sales data remains upbeat. The economic data has landed at 3.1% much higher than the forecast of 0% and the prior print of -6.7%. It is worth noting that Australia is a leading exporter to China and the latter’s economic data carries a significant impact on the Australian dollar.

The aussie bulls are performing stronger against yen after the release of the upbeat Australian employment data. The labor market in Australia has remained tight in June and the economy has reported an outperformance in employment generation. Also, the Unemployment Rate has slipped significantly to 3.5%.

On the Tokyo front, the economy is worried over its inability to drive the inflation rate higher. The plain-vanilla inflation rate has crossed 2%, however, the core Consumer Price Index (CPI) is extremely poor, which indicates that the demand for durable goods is subdued. Apart from that, lower wage rates may trim the inflation rate back below 2%.