AUD/JPY drops below $90.00 as focus shifts to China’s official PMI data

• AUD/JPY has slipped below the psychological support of $90.00 amid China’s Covid uncertainty.
• China’s official PMI data for December is expected to outperform ahead.
• The BoJ will supply about JPY one trillion at a 0.0% interest rate in operations on January 4.

The AUD/JPY pair has surrendered the psychological support of 90.00 in the Asian session. The risk barometer has sensed a sell-off move as a spike in Covid-19 cases in China is forcing other nations to look for extremely safe measures for arrivals from China. A significant surge in Covid cases in China is impacting the Australian Dollar as trading activity could reduce led by further supply chain disruptions.

The expression of the reopening of China from January 2023 with the intention of easing supply chain bottlenecks has resulted in further disruptions. Major nations are demanding negative Covid reports of arrivals from China to safeguard themselves from the pandemic. Meanwhile, China’s Center for Disease Control and Prevention (CDC) top epidemiologist Wu Zunyou warned at a briefing on Thursday, Covid is seen spreading throughout the holiday season.

Apart from the Covid situation, investors are getting uncertain about China’s official PMI data, which will release this weekend. As per the consensus, the National Bureau of Statistics (NBS) Manufacturing PMI is seen higher at 49.2 vs. the former release of 48.0. A sheer outperformance is expected from the Non-Manufacturing PMI catalyst as the economic data is seen at 51.4 vs. the prior release of 46.7.

It is worth noting that Australia is a leading trading partner of China and economic uncertainties in China bring volatility to the Australian Dollar.

On the Tokyo front, the Japanese Yen is getting traction despite the announcement of funds-supplying operations against pooled collateral by the Bank of Japan (BoJ) on Thursday. The BoJ will supply about JPY one trillion at a 0.0% interest rate in operations on January 4.