AUD/JPY has declined to around 94.00, experiencing a three-session losing streak due to poor Australian employment figures. The Australian Dollar (AUD) is under pressure following a decrease of 52.8K in employment for February, a stark contrast to the previous month’s increase of 44K and below the expected rise of 30K.
The unemployment rate in Australia remains steady at 4.1%, aligning with market expectations. The People’s Bank of China has kept its Loan Prime Rates steady, with the one-year rate at 3.10% and the five-year rate at 3.60%, which potentially affects demand for the AUD.
Japanese Yen Gains Strength
The Japanese Yen (JPY) has gained strength as traders price in a possible Bank of Japan rate hike in 2025. The BoJ has maintained its short-term interest rate target within the 0.40%-0.50% range, and their Monetary Policy Statement notes moderate recovery in Japan’s economy.
Consumer spending is gradually increasing, with inflation expectations on the rise. The BoJ Governor has stated that the central bank will modify its policy to support steady achievement of price targets.
The latest developments in the AUD/JPY pair suggest that traders should be attentive to how broader economic indicators continue to influence near-term movements. The Australian labour market has shown unexpected weakness, with February’s sharp drop in employment reversing January’s gains. While the jobless rate holding at 4.1% might seem stable, the decline in overall employment shifts the outlook. This suggests that economic momentum in Australia could be slowing, which naturally puts strain on its currency.
Meanwhile, the People’s Bank of China decided to keep its Loan Prime Rates unchanged, leaving the key one-year rate at 3.10% and the five-year at 3.60%. Given China’s close trade ties with Australia, any further hesitation from Beijing to introduce stimulus could weigh on demand for Australian exports. This would influence risk sentiment in the Australian Dollar and may keep traders cautious in the weeks ahead.
On the opposite side, Japan’s currency has strengthened, largely due to anticipated policy adjustments by its central bank. The Bank of Japan has held its short-term rate within the 0.40%-0.50% range so far, but markets are already looking toward the possibility of a rate increase in 2025. Traders have taken note of the BoJ’s view that Japan’s economy is on a moderate path to recovery, supported by improving consumer spending and rising inflation expectations. The governor has reinforced that any policy shifts will be guided by the goal of ensuring price targets are met in a stable manner.
Implications For Traders
For those involved in derivative trading, these recent shifts in employment figures, interest rate expectations, and monetary policy direction present clear signals for the coming sessions. The contrast between a struggling Australian labour market and growing speculation over tighter monetary policy in Japan may continue to shape market positioning. Examining further Australian economic data will be necessary to determine whether the downturn in employment is a one-time event or part of a broader slowdown. Likewise, any adjustments in Japan’s stance could introduce further volatility.
The balance of expectations will likely be a determining factor for short-term price action, and traders will need to assess whether these recent trends have already been priced in or if further movement is ahead.
