New tariffs kicked in yesterday as the US and China both implemented their previously announced measures. China opted to implement tariffs to only about one-third of the 5,000 goods on the list with the rest scheduled for December 15th 2019. The US has also delayed tariffs on plenty of consumer goods until that day in order to bridge the key shopping season in the US. Chinese manufacturing data for August surprised to the upside and expanded against expectations for a contraction. This helped keep the Australian Dollar, the top Chinese Yuan proxy trade, stable and the AUDJPY at strong support levels. Australian manufacturing data for August also expanded which further added bullish momentum to the currency. Can this currency pair use support levels to push higher? This morning’s fundamental analysis will take a look at the upside potential as well as downside risk of this currency pair.

Japanese data released this morning showed a steep drop in second-quarter in company profits with a contraction in company spending excluding software. In contrast, Australian company profits for the same period rose. Adding to downside pressures for the Japanese Yen was a downward revision to the final August Manufacturing PMI which now shows a bigger contraction than previously reported. Lending support to the Japanese currency was the inflow of safe haven capital after the implementation of the latest round of tariffs as the Bank of Japan is closely monitoring the strength of its currency. Is a short-covering in the AUDJPY brewing? Subscribe to the PaxForex Daily Fundamental Analysis and earn more pips per trade.