The AUDJPY has economic data ahead, with Australian employment figures ahead of Wednesday’s opening and Japanese inflation a day later.
AUDJPY – Daily Chart
The AUDJPY has suffered over the last month as the RBA put the brakes on the rate hikes. The pair trades at 94.00 with support 100 pips below and a potential test of that level coming this week.
The Australian economy is expected to suffer a decline in jobs added from 32.6k to 15k. The unemployment rate will also likely increase to 3.6% from 3.5%. According to the Australian Bureau of Statistics, the Unemployment Rate of 3.5% in June was a remarkable achievement.
A strong labour market and rising inflation have forced the Reserve Bank of Australia (RBA) to hike interest rates to 4.10%, but it has paused lately. With smaller price rises, the RBA also watches the labour market closely, which means traders also use it as an important indicator.
If the figure comes in near the 15k mark expected, then there will be no action from the RBA and another dip in the Aussie dollar.
The Japanese economy will deliver the latest inflation report after the Asian session on Wednesday, with traders expecting a figure of 2.5%, down from 3.3% last month. But with GDP coming in much higher than expectations, it is possible that there was some extra heat on prices.
Japan’s economy came in strongly for April-June, with healthy auto exports and tourist arrivals, offsetting a weaker global economy. But there are still recession risks looming across the world and some added pressure on Chinese property, which could give a safe haven boost to the yen.
The current trend would favour another move lower in the AUD vs JPY exchange rate, but the data over the next two days will confirm that. A hotter-than-expected move in Japanese prices could even lead to speculation of a tightening in monetary policy.
