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The market remained risk-off in early trading on Thursday, with AUD/JPY falling to 94.10 at press time, citing weak Australian data and a slightly hawkish policy bias from the Bank of Japan. During this period, AUD/JPY fell for three days in a row, which also confirmed the weakness in bond yields.
Australia’s trade surplus narrowed to A$8.039 billion, compared with A$10 billion expected and the previous value of A$11.321 billion. Further data showed that Australia’s exports of goods/services in July were -2.0% on a monthly basis. In other words, Australia’s imports of goods/services increased by 3% monthly in July, compared with the previous value of -4.0%.
On the other hand, Bank of Japan policymaker Junko Nakagawa initially defended loose monetary policy, saying it was appropriate to maintain loose monetary policy for now, while adding that Japan was still not at a level that could be said to be stable and sustainable. stage of central bank price targets.
It is worth noting that concerns about a slowdown in China and optimism in the US and Japan, not to mention the impact of the Australian economy, while maintaining AUD/JPY’s status as a risk barometer, combined to affect market sentiment and AUD/JPY Yen price.
On Wednesday, Australia’s Q2 Gross Domestic Product (GDP) grew by 0.4% QoQ, higher than the expected 0.3% and the previous 0.2%, but the annual rate fell to 2.1% from the previous value of 2.3%, lower than the expected value of 1.7%.
Concerns about China’s economy have intensified amid a weak Caixin service sector purchasing managers’ index released earlier in the week and a lack of confidence in China’s stimulus policies.
On the other hand, Japan’s top official in charge of foreign exchange affairs Kanda Masato and Chief Cabinet Secretary Hiroichi Matsuno both mentioned on Wednesday that they should pay attention to the foreign exchange market with a high sense of urgency. The two policymakers added that they would respond appropriately to these moves if necessary, but did not rule out taking any measures.
Elsewhere, Bank of Japan (BoJ) board member Hajime Takata defended the central bank’s easing policy, saying the outlook was very uncertain. “The Bank of Japan will closely monitor market developments to achieve stability in the bond market, while focusing on the pros and cons of the bond yield control curve policy. Bank of Japan official Takata also cited stronger-than-expected U.S. economic growth as a reason for a stronger dollar, adding He said that there is still a certain distance between giving up the negative interest rate policy.
Against this backdrop, U.S. 10-year Treasury yields struggled to extend the previous day’s gains, hitting a two-week high, while S&P 500 futures were last under pressure.
Next, China’s trade balance for August and Philip Lowy’s speech before his appointment as RBA governor will be an important basis for observing the direction of AUD/JPY.
