The Japanese Yen (JPY) and Australian Dollar (AUD) face critical market drivers as traders brace for new economic data from Japan, China, Australia, and the United States. The upcoming Non-Farm Payrolls (NFP) report, Chinese PMI figures, and Australia’s Producer Price Index (PPI) will likely shape near-term currency direction for USD/JPY and AUD/USD pairs.
Japan’s Labor Market and BoJ Rate Hike Speculation
Japan’s unemployment rate remained unchanged at 2.5% in June, while the job openings-to-applicants ratio slipped from 1.24 to 1.22—hinting at easing labor market conditions. Softer wage growth expectations could dampen consumer spending, reducing inflationary pressure and weakening the Bank of Japan’s (BoJ) case for further rate hikes in 2025.
Following the data, USD/JPY climbed from 150.73 to 150.81, as investors revised their expectations for a more dovish BoJ stance.
Despite holding interest rates steady at 0.5% on July 31, the BoJ raised its inflation forecasts. With a US-Japan trade deal in place and worst-case tariff scenarios avoided, some economists—like AMP’s Shane Oliver—see room for a possible 25-basis-point hike by year-end.
USD/JPY: US Jobs Report Will Steer Momentum
The July US Jobs Report will be a key determinant for USD/JPY. Forecasts point to a 110,000 gain in nonfarm payrolls, with stronger wage growth and an uptick in unemployment. A hot report may eliminate hopes for a September Fed rate cut and push USD/JPY toward its March high near 151.20.
On the flip side, weak labor data could revive dovish sentiment and send the pair lower toward 149.35 support.
USD/JPY Key Scenarios:
- Bullish: Strong US jobs data + dovish BoJ = Rally toward 151.20
- Bearish: Weak US jobs + hawkish BoJ = Drop toward 149.35
AUD/USD Outlook: Inflation Data and China PMI in Focus
In Australia, second-quarter PPI data could shift Reserve Bank of Australia (RBA) policy expectations. Forecasts suggest producer prices slowed to 2.9% YoY from 3.7%. A weaker print could trigger fresh speculation around Q4 rate cuts and pressure AUD/USD toward 0.6400 or lower.
Conversely, a stronger-than-expected PPI reading may reduce dovish bets and offer support for the Aussie.
RBA Deputy Governor Andrew Hauser recently described Q2 CPI as “very welcome” and consistent with inflation returning to target—further signaling that the RBA may resume easing as early as August.
China PMI: Major Driver for Aussie Sentiment
Australia’s economic ties with China make the upcoming Caixin Manufacturing PMI release especially important for the AUD. A forecast dip to 50.2 from 50.4 signals stagnating factory activity. A drop below the 50 mark would indicate contraction and weaken demand for Australian exports—adding downside pressure on AUD/USD.
RBA Governor Michele Bullock emphasized China’s importance during the July press conference, noting that any fiscal stimulus from Beijing could help cushion the impact of tariffs and aid Australian growth.
AUD/USD: What to Watch
- Bearish Case: Weaker China PMI + soft Aussie inflation = AUD/USD drop to 0.6400 or even 0.6362
- Bullish Case: Strong China data + hotter PPI = Bounce toward 200-day EMA
Final Thoughts: Global Data to Drive Volatility in JPY and AUD
As traders navigate shifting rate expectations and macroeconomic headwinds, both USD/JPY and AUD/USD remain highly sensitive to upcoming events. The US Jobs Report, China’s PMI, and Australia’s inflation data will likely dictate price action in the coming sessions.
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