AUD/JPY erases early gains, drops below 78.00 with S&P 500 futures reporting losses

• AUD/JPY is reporting marginal losses at press time and could revisit Friday's lows near 77.73 on risk aversion. 
• China inflation numbers released over the weekend pointed to lackluster demand in the world’s second-largest economy.

AUD/JPY is currently trading at 78.00, having hit a high of 78.26 earlier today. 

The early gains have been erased possibly due to signs of risk aversion in stocks. As of writing, the futures on the S&P 500 are reporting a 0.30 percent drop. 

Stock markets across the globe may remain risk-averse today on growing evidence of a deeper slowdown in the world's second-largest economy. China's producer price index or factory-gate inflation rose 0.1 percent on year in February, the slowest pace since September 2016. On a monthly basis, the PPI fell 0.1 percent. 

Meanwhile, consumer price index (CPI) rose 1.5 percent from a year earlier, the slowest since January 2018, indicating weakening domestic demand conditions. 

China may roll out more stimulus in the near future, although the room for aggressive easing is quite limited. The authorities have time and again stated that a "flood-like" stimulus is unlikely. 

All-in-all, investors are likely to shun risk in favor of the anti-risk currencies like JPY. Therefore, AUD/JPY risks revisiting lows near 77.70 created on Friday. 

AUD/JPY Technical Levels