Aud/Jpy steady near 100.00 amid hawkish rba, mixed data
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AUD/JPY trades near the 100.00 level as it balances Australia’s hawkish rate outlook with soft Japanese PMI data and a supportive economic boost from China. Strong Q3 PPI data in Australia supports further upside potential for the Australian Dollar, even as the Japanese Yen gains from Bank of Japan policy speculation.
Australian Dollar Supported by Hawkish RBA Expectations The AUD/JPY pair has seen limited downside despite a subdued start to Friday’s European session. Australia’s Producer Price Index (PPI) rose by 0.9% quarter-on-quarter in Q3, exceeding the forecasted 0.7% increase and reflecting persistent inflationary pressure in Australia. This data supports expectations for a hawkish stance from the Reserve Bank of Australia (RBA), with the bank anticipated to maintain a strong policy approach to tackle inflation.
On an annual basis, Australia’s PPI grew by 3.9% in Q3, marking the 17th consecutive period of producer price increases, albeit down from 4.8% in the previous quarter. The consistent inflation trend is expected to bolster the RBA’s resolve in tightening monetary policy, providing continued support for the Australian Dollar.
China’s Manufacturing PMI Boost and Implications for AUD
China’s Caixin Manufacturing PMI rose to 50.3 in October, moving back into expansionary territory after September’s contraction at 49.3. China, being a key trade partner for Australia, heavily influences the Australian economy, especially in sectors such as mining and commodities. The better-than-expected data from China suggests a potential rise in demand for Australian exports, which could positively impact the AUD.
Japan’s Manufacturing Weakness and Bank of Japan Policy Expectations
Meanwhile, Japan’s au Jibun Bank Manufacturing PMI fell to 49.2 in October from 49.7 in September, pointing to a contraction in the Japanese manufacturing sector. Lower new orders and output continue to weigh on Japan’s industrial economy, creating headwinds for the Yen. However, the Japanese Yen showed some strength following BoJ Governor Kazuo Ueda’s comments, which were interpreted as signaling a possible rate hike in December. The BoJ’s outlook suggests that rate hikes could continue as long as economic conditions support the inflation target, providing potential Yen strength.
Technical Analysis: AUD/JPY Range-Bound With Upside Potential
Resistance Levels: The pair faces resistance near the 100.50 mark. If it can break above this level, the AUD/JPY could test further highs around 101.20, strengthening its upward momentum. Support Levels: The psychological level of 100.00 acts as an immediate support, while additional cushioning is anticipated around 99.50. A breakdown below these levels could prompt further selling pressure on the pair. With a mixed fundamental backdrop, AUD/JPY’s movement will largely depend on upcoming RBA guidance and any shifts in BoJ policy, making it a closely-watched pair as we move further into Q4 2024.
Australian Dollar Supported by Hawkish RBA Expectations The AUD/JPY pair has seen limited downside despite a subdued start to Friday’s European session. Australia’s Producer Price Index (PPI) rose by 0.9% quarter-on-quarter in Q3, exceeding the forecasted 0.7% increase and reflecting persistent inflationary pressure in Australia. This data supports expectations for a hawkish stance from the Reserve Bank of Australia (RBA), with the bank anticipated to maintain a strong policy approach to tackle inflation.
On an annual basis, Australia’s PPI grew by 3.9% in Q3, marking the 17th consecutive period of producer price increases, albeit down from 4.8% in the previous quarter. The consistent inflation trend is expected to bolster the RBA’s resolve in tightening monetary policy, providing continued support for the Australian Dollar.
China’s Manufacturing PMI Boost and Implications for AUD
China’s Caixin Manufacturing PMI rose to 50.3 in October, moving back into expansionary territory after September’s contraction at 49.3. China, being a key trade partner for Australia, heavily influences the Australian economy, especially in sectors such as mining and commodities. The better-than-expected data from China suggests a potential rise in demand for Australian exports, which could positively impact the AUD.
Japan’s Manufacturing Weakness and Bank of Japan Policy Expectations
Meanwhile, Japan’s au Jibun Bank Manufacturing PMI fell to 49.2 in October from 49.7 in September, pointing to a contraction in the Japanese manufacturing sector. Lower new orders and output continue to weigh on Japan’s industrial economy, creating headwinds for the Yen. However, the Japanese Yen showed some strength following BoJ Governor Kazuo Ueda’s comments, which were interpreted as signaling a possible rate hike in December. The BoJ’s outlook suggests that rate hikes could continue as long as economic conditions support the inflation target, providing potential Yen strength.
Technical Analysis: AUD/JPY Range-Bound With Upside Potential
Resistance Levels: The pair faces resistance near the 100.50 mark. If it can break above this level, the AUD/JPY could test further highs around 101.20, strengthening its upward momentum. Support Levels: The psychological level of 100.00 acts as an immediate support, while additional cushioning is anticipated around 99.50. A breakdown below these levels could prompt further selling pressure on the pair. With a mixed fundamental backdrop, AUD/JPY’s movement will largely depend on upcoming RBA guidance and any shifts in BoJ policy, making it a closely-watched pair as we move further into Q4 2024.