AUD/JPY falls below $90.00 as market attention moves to China's official PMI data

During the Asian session, the AUD/JPY pair has abandoned the psychological support at 90.00. The risk barometer has detected a sell-off as an increase in Covid-19 cases in China compels other governments to implement stringent safety precautions for Chinese newcomers. A considerable increase in Covid cases in China has a negative effect on the Australian dollar, as further supply chain interruptions may restrict trading activity.

The announcement that China will reopen in January 2023 in an effort to alleviate supply chain bottlenecks has caused additional disruptions. To protect themselves against the epidemic, major nations are requesting negative Covid reports on Chinese arrivals. The head epidemiologist at China's Center for Disease Control and Prevention (CDC) warned at a briefing on Thursday that Covid is expected to spread throughout the Christmas season.

In addition to the Covid scenario, investors are apprehensive about China's official PMI data, which will be released this coming weekend. The consensus forecast for the National Bureau of Statistics (NBS) Manufacturing PMI is 49.2, up from the previous reading of 48. The Non-Manufacturing PMI catalyst is anticipated to surpass the prior release by a significant margin, as the current economic data is projected to be 51.4 versus 46.7.

Australia is China's most important trading partner, and economic uncertainty in China causes volatility in the Australian Dollar.

Despite the launch of funds-supplying operations against pooled collateral by the Bank of Japan (BoJ) on Thursday, the Japanese Yen is gaining ground in Tokyo. On January 4, the Bank of Japan will supply around one trillion Japanese yen at a zero percent interest rate.