AUD/JPY adds 30 pips despite the drop in Asian equities

• AUD/JPY is flashing green despite the risk-off tone in the Asian stocks.
• The uptick in the S&P 500 futures seems to have put a bid under the pair.
• The Westpac-Melbourne Institute Leading Index has turned positive for first since November 2018.

AUD/JPY is reporting gains at press time, despite the losses in the Asian equities.

As of writing, the currency pair is trading at 72.22, representing 0.31% gains on the day. The pair hit a high of 72.30 a few minutes before press time. At that level, the pair was up 30 pips from the low of 72.00 seen in the early Asian trading hours.

Asian stocks drop

Major Asian equity indices like Japan's Nikkei and Australia's S&P/ASX 200 are currently reporting losses and the shares in China are flat lined.

The demand for risk assets weakened in the North American trading hours on Tuesday after President Trump refused to back down from the trade war with China.

Even so, the anti-risk JPY weakened in Asia and remains on the defensive at press time. The resulting gains in the AUD/JPY pair could be associated with the 0.27% rise seen in the S&P 500 futures.

Also, the upbeat Aussie data released in Asia may have put a bid under the AUD. The Westpac-Melbourne Institute Leading Index, which indicates the likely pace of future economic activity, ticked higher to 0.10% in July from the previous month's print of -0.08%. July's figure is the first positive reading since November 2018.

Looking forward, the pair may extend gains if the European equities put on a good show, although that looks unlikely due to heightened political uncertainty in Italy and German recession fears.

Pivot levels