AUD/JPY crashes on Aussie wage data miss

• AUD/JPY drops following key wage data miss.
• AUD/JPY's M-formation could lead to a downside continuation towards 92.50 in the near term.

AUD/JPY dropped on the back of a miss in the Wage Price Index and is now down 0.5% on the day. The pair fell from 94.15 to a low of 93.76. The data arrived as follows:

• Australia Wage Price Index (QoQ) Q2: 0.7% (est 0.8%; prev 0.7%) .
• Wage Price Index (YoY) Q2: 2.6% (est 2.7%; prev 2.4%).

Meanwhile, fears of a significant slowdown of the Chinese economy have weighed on the Australian dollar this week due to lower demand for iron ore and other assets from China. Figures for Industrial Production, Retail Sales and fixed asset investments, as released by the National Bureau of Statistics, missed expectations in July.

Additionally, worries about a more pronounced cooling rose from a surprising rate cut by the Chinese central bank PBoC. Investors figured that the PBoC is alarmed about the extent of economic weakening as it tries to revive credit demand to support the COVID-hit economy after a string of weak economic data releases for July.  

Looking ahead, the labour data is coming up. ''July is a seasonally strong month for job gains and we look for the unemployment rate to trend lower. Another strong labour print should give the RBA the assurance that the economy can withstand a cash rate of 3% by end-2022,'' analysts at TD Securities explained. 

AUD/JPY technical analysis

AUD/JPY's M-formation could lead to a downside continuation towards 92.50 in the near term with the price being resisted near the 61.8% Fibonacci.