AUD/JPY continues to trim gains after below-forecast China data
- AUD/JPY is trimming gains on risk aversion and below-forecast China data.
- China's Caixin Services PMI for December came in at 52.5.
AUD/JPY's pullback from session highs has gathered steam following a weaker-than-expected China data.
The pair is currently trading at 74.86, having hit a high of 75.20 an hour ago.
Notably, the pair shed close to 20 pips (74.08-74.86) following the release of Caixin's China Services PMI (Dec), which came in at 52.5 versus 53.5 in November, indicating the pace of expansion slowed in the final month of 2019.
Risk-off favors Yen
AUD/JPY, a barometer of risk sentiment, looks set to extend losses, as escalating tensions between the US and Iran and the resulting risk-off tone will likely draw bids for the anti-risk yen.
Iran's supreme leader Ayatollah Ali Khamenei promising 'severe revenge' for Iranian general Soleimani's death. Also, Tehran has announced that its nuclear program would “have no limitations” on enriching uranium.
Further, President Trump has warned that the US will target 52 sites in Iran and will hit them “very fast and very hard” if the Islamic republic attacks American personnel or assets.
As a result, the futures on the S&P 500 are currently down almost 0.5%. Stocks in Asia are also flashing red with Japan's Nikkei reporting a 500 point or 2.12% drop.