AUD/JPY fades a spike to 79.30 ahead of China Caixin PMI

• Breaks higher once again amid US-China trade progress led risk-on
• Downbeat Chinese Caixin PMI could cap the gains ahead of US NFP.

The AUD/JPY cross caught a fresh bid-wave last hour and hit fresh daily tops at 79.31, with the Tokyo traders hitting their desks and cheering the risk-on market sentiment, fuelled by a fresh optimism over the US-China trade talks.

“China is pinning all hopes on another meeting between Mr. Trump and Chinese leader Xi Jinping next month as a wide gap still remains between U.S. demands and what Beijing is willing to offer, according to people briefed on the matter”, Ross Burland, FXStreet’s Editor notes.

The Japanese benchmark index, the Nikkei 225 opened firmer, now trading +0.50% near 20,880 levels while the Australian ASX 200 trades flat around 5865 points. Despite the renewed uptick, the bulls lack follow-through amid below estimates Australian PPI data while stronger Japanese Nikkei manufacturing final PMI underpins the sentiment around the Japanese currency.

Meanwhile, the expectations that the Chinese manufacturing sector activity will contract further in January also keeps the bulls slightly nervous. Disappointing Chinese factory data could reinforce China slowdown concerns and trigger a fresh risk-aversion wave that could weigh down on the fear gauge, AUD/JPY.

AUD/JPY Technical Levels