Ella 
AUD/JPY closed higher for the fifth day in a row on Thursday.
Australia’s private capital expenditure rose 2.8% quarter-on-quarter in the second quarter, compared with the previous 2.4%.
Japan’s July retail sales rose 6.8% on year from 5.6% in the previous month, beating expectations for a 5.4% increase.
Australia’s S&P Global Manufacturing PMI and Japan’s Nikkei Manufacturing PMI will be released on Friday.
AUD/JPY is gaining momentum above the mid-94.00 level during Thursday’s Asian session. AUD/JPY is currently trading around 94.74, up 0.04% on the day. Monetary policy divergence between the U.S. and Japan remains behind the yen’s weakness.
The Australian Bureau of Statistics announced on Thursday that the country’s private capital spending rose 2.8% in the second quarter from 2.4% in the previous quarter. This figure was 1.2% better than expected. At the same time, the monthly rate of private sector credit increased by 0.3%, the previous value was 0.2%, in line with expectations of 0.3%. AUD/JPY remains firm despite mixed Australian economic data.
The latest data from Japan’s Ministry of Economy, Trade and Industry showed that retail sales rose at an annual rate of 6.8% in July, compared with a previous reading of 5.6% and better than expectations for a 5.4% increase. On the other hand, industrial production fell by 2.0% month-on-month in July, compared with a rise of 2.4% in the previous month, and the market expected a drop of 1.4%.
Bank of Japan Governor Kazuo Ueda said at a Federal Reserve seminar on Saturday that the central bank believes that the underlying inflation rate is still below the target and therefore will maintain the current ultra-loose monetary policy mechanism. Domestic demand remained strong and business fixed investment was also boosted by record profits, according to policymakers. However, the divergence in monetary policy between the United States and Japan is the main driver of the yen’s weakness.
Looking ahead, Australia’s S&P Global Manufacturing PMI for August and Japan’s Nikkei Manufacturing PMI will be released on Friday. Traders will look for trading opportunities on the AUD/JPY cross from this data.
