AUD/JPY seesaws around 70.40 following downbeat China Caixin PMI

• AUD/JPY stops its early-day recovery after China data followed the official PMIs.
• Risk-tone remains under pressure as coronavirus fears keep spreading.
• RBA is mostly certain to announce a 0.25% rate cut on Wednesday.

AUD/JPY declines to 70.40 after China’s Caixin Manufacturing PMI flashed disappointing figures amid the early Monday. The private activity gauge followed the footsteps of official data dropped to the record low during the weekend.

Read: Caixin China PMI Mfg (Feb): 40.3 (est 46, prev 51.1)

On the other hand, risk-tone remains under pressure as coronavirus continues to spread outside China. Despite a slight pullback in Japan’s NIKKEI and S&P 500 Futures, the market’s risk-tone remains under pressure as the US 10-year treasury yields are still taking rounds to the record low figures by the press time.

The reason for this could be traced from the BOJ Governor Haruhiko Kuroda’s readiness for further stimulus.

Earlier during the day, Japan’s final reading of January month Jibun Bank Manufacturing PMI rose beyond the preliminary forecast of 47.6 to 47.8. Ahead of that, Aussie activity numbers from the AiG and the Commonwealth Bank flashed mixed signals with the former declining below 45.4 prior to 44.3 whereas the later crossing 49.8 expected with 50.2.

Traders will now keep eyes on coronavirus headlines as well the comments from the global policymakers, be it central bankers or government authorities for fresh impulse. However, the broad attention will be on Wednesday’s RBA meeting wherein the Aussie central bank is widely expected to announce a 0.25% rate cut.

Technical Analysis

AUD/JPY bounces off the multi-week support line stretched from early 2019, which in turn pushes the quote towards October 2019 low near 71.7350 during further recovery. Alternatively, sellers will look for entry below the mentioned support line around 69.30. In doing so, early-January 2009 top near 68.20 can act as the follow-on rest-point.