Ella 
The AUD/JPY pair struggled for a clear direction during Monday’s Asian session, oscillating between slight gains and losses around the 107.00 level. Market sentiment was tempered despite the release of underwhelming Chinese macroeconomic data, which had minimal impact on currency movements.
Chinese Economic Data Review
Growth Figures: China’s economy expanded by 4.7% year-on-year in the second quarter of 2024, down from 5.3% in the previous quarter. Quarter-on-quarter growth was 0.7% in Q2 2024, a decline from 1.5% in Q1.
Retail Sales: Chinese retail sales increased by 2.0% year-on-year in June, falling short of expectations of 3.1% and down from 3.7% in the previous period.
Industrial Production: Industrial production rose by 5.3% year-on-year in June, surpassing estimates of 5.0% but lower than May’s 5.6%.
Fixed Asset Investment: Year-to-date fixed asset investment grew by 3.9% year-on-year in June, meeting expectations but slightly lower than the 4.0% recorded previously.
Market Dynamics
AUD Considerations: The Australian Dollar (AUD) showed resilience despite the lackluster Chinese data, supported by expectations that the Reserve Bank of Australia (RBA) might resume interest rate hikes.
JPY Support: The Japanese Yen (JPY) found support amid speculation that the Bank of Japan (BoJ) could raise interest rates to counteract a weakening domestic currency. Furthermore, safe-haven demand for the JPY increased due to geopolitical uncertainties surrounding the US following the alleged assassination attempt on former President Donald Trump.
Market Sentiment: The combination of these factors led to cautious trading around the AUD/JPY pair, keeping it range-bound. Traders refrained from aggressive bets, awaiting clearer signals before committing to further directional movements.
Conclusion
Market participants are advised to monitor upcoming developments closely, including central bank actions and geopolitical events, which could provide clearer signals for future AUD/JPY movements. The pair’s stability around the 107.00 mark suggests a wait-and-see approach until stronger market drivers emerge.
