AUD/JPY climbs above mid-96.00s after Chinese data; upside potential seems limited

AUD/JPY stages a modest recovery from a nearly one-month low touched earlier this Friday.
The mostly upbeat Chinese macro data underpins the Aussie and lends support to spot prices.
Bets for another BoJ rate hike next week favors the JPY bulls and cap the upside for the cross.

Haresh Menghani FXStreet

The AUD/JPY cross recovers slightly from a nearly one-month low, around the 96.26 region touched during the Asian session on Friday and for now, seems to have snapped a two-day losing streak. Spot prices stick to modest intraday gains near mid-96.00s following the release of Chinese macro data, though the fundamental backdrop warrants some caution for bullish traders.

The National Bureau of Statistics (NBS) reported that China's economy expanded by 5.4% over the year in the fourth quarter of 2024 after recording a 4.6% growth in the previous quarter. This was well above consensus estimates for a reading of 5% and was accompanied by better-than-expected Retail Sales, which increased by 3.7% in December as compared to 3% prior. Adding to this, Industrial Production arrived at 6.2% vs. 5.4% forecast, while the Fixed Asset Investment advanced 3.2% year-to-date (YTD) YoY in December, providing a modest lift to the China-proxy Aussie.

Apart from this, a modest downtick in the Japanese Yen (JPY) lends some support to the AUD/JPY cross. Any meaningful JPY depreciation, however, seems elusive in the wake of rising bets that the Bank of Japan (BoJ) will hike interest rates again next week. The expectations were reaffirmed by the recent remarks from BoJ Governor Kazuo Ueda and Deputy Governor Ryozo Himino. This, along with a softer risk tone and worries about US President-elect Donald Trump's tariff plans, could underpin the safe-haven JPY and cap the perceived riskier Australian Dollar (AUD).

Furthermore, the Reserve Bank of Australia's (RBA) dovish shift warrants some caution before positioning for any further near-term appreciating move for the AUD/JPY cross. Traders might also opt to move to the sidelines and keenly await the highly-anticipated BoJ monetary policy meeting on January 23-24 to confirm the next leg of a directional move for spot prices.

Economic Indicator

Gross Domestic Product (YoY)

The Gross Domestic Product (GDP), released by the National Bureau of Statistics of China on a monthly basis, is a measure of the total value of all goods and services produced in China during a given period. The GDP is considered as the main measure of China’s economic activity. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Renminbi (CNY), while a low reading is seen as bearish.

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold loses the grip; $4,000 comes next on the downside

Gold sets aside two daily advances in a row on Friday, opening the door to a potential test of the key $4,000 mark per troy ounce. The precious metal’s retracement follows a decent improvement in the sentiment surrounding the US Dollar, solid NFP data and higher US Treasury yields across the board.

Democrats win House and Senate in US midterms: Why isn’t all bad news for crypto

The biggest story this week was Tuesday’s US midterm elections, which saw Democrats win control of both the House and the Senate in a clear blue wave. This political shift in the US has triggered sharp price swings across the cryptocurrency market.

Week ahead – Inflation and geopolitics in focus as US political landscape shifts

Post-midterm election euphoria fizzles out as risk aversion prevails. US CPI, PPI and Fedspeak on the radar as Fed hike bets remain supported. Oil retreat pauses on mixed hopes about the ongoing conflicts.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.