- AUD/JPY has attempted a break above the 91.70 hurdle despite weaker-than-projected Australian GDP data.
- The annual and quarterly Australian GDP has declined to 5.9% and 0.6%, respectively.
- A decline in China’S inflation would propel PBOC to announce more policy-easing measures.
The AUD/JPY pair has overstepped the critical resistance of 91.70 despite a weaker-than-projected Australian Gross Domestic Product (GDP). The annual GDP data has landed at 5.9%, lower than the expectations of 6.3% and the prior release of 3.6%. While quarterly GDP data has been reported lower at 0.6% vs. the projections of 0.7% and the former release of 0.9%.
Weaker-than-projected Australian GDP data will support the Reserve Bank of Australia (RBA) in meeting its agenda of achieving price stability. The cross remained extremely volatile on Tuesday after the RBA hiked its Official Cash Rate (OCR) consecutively for the third time by 25 basis points (bps). This has pushed the Australian interest rates to 3.10%. The decision of a 25 bps rate hike was very much in line with the estimates.
On interest rate guidance, RBA Governor Philip Lowe said that further tightening of monetary policy is likely to be forthcoming. The RBA is not in a hurry to pause interest rate hikes any sooner, as the current inflation rate at 6.9% is far from the targeted rate of 2%. Therefore, more policy-tightening measures cannot be ruled out.
This week, investors will keep an eye on China’s Consumer Price Index (CPI) data, which will release on Friday. The annual CPI is expected to drop vigorously to 1.0% from the prior release of 2.1%. This could force the People’s Bank of China (PBOC) to ease policy further. It is worth noting that Australia is a leading trading partner of China, and monetary easing in China will strengthen the Australian Dollar.
Meanwhile, Japanese yen investors are awaiting Thursday’s GDP data. The economic data is expected to contract by 1.1% against the prior contraction of 1.2%. While the quarterly data is likely to contract by 0.3%, similar to the prior release.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.