- AUD/JPY has not shown a meaningful reaction to the upbeat Australian PMI data.
- The RBA is expected to slowly push its OCR higher to 4.1% to tame soaring inflation.
- The reason behind widening BoJ’s YCC band was to make them more sustainable.
The AUD/JPY pair has shown a muted response to the upbeat Australian S&P Global PMI. The Services PMI has landed at 48.6 higher than the consensus and the prior release of 48.3. Also, the Composite PMI has scaled to 48.5 against the former release of 48.2. An absence of a contraction in economic activities despite rising interest rates by the Reserve Bank of Australia (RBA) could keep Australian inflationary pressures intact.
The Australian Dollar is expected to remain volatile on Friday ahead of the release of the Caixin Services PMI (Jan). The economic data is seen at 47.3 lower than the former release of 48.0. A decline in the Services PMI could impact the Australian Dollar as Australia is a leading trading partner of China.
Next week, the Australian Dollar will remain in the spotlight due to the interest rate decision announcement by the RBA. The Australian inflation rate has not shown a peak yet as it has shown a fresh high of 7.8% in the fourth quarter of CY2022. RBA Governor Philip Lowe might not have another option than to hike interest rates further.
Analyst at Deutsche Bank Australia sees the RBA likely to drive the Official Cash Rate (OCR) to 4.1%, citing the most recent inflation update of a 7.8% increase in the CPI, which was slightly higher than expected. “While the RBA will likely move more slowly in 2023 than it did in 2022, we now expect four more 25 basis point hikes this year: 25 basis points in each of February and March, and 25 basis points each at the May and August meetings” as reported by Forbes Advisor.
On the Japanese Yen front, investors are awaiting the release of the Jibun Bank Services PMI for fresh cues. The economic data is seen steady at 52.4. The street is still confused about the rationale behind widening the Yield Curve Control (YCC) by the Bank of Japan (BoJ) in its December monetary policy meeting. Meanwhile, BoJ Deputy Governor Masazumi Wakatabe is back on the wires this Thursday, noting that the “BoJ's Dec decision to widen band was a necessary step to make YCC more sustainable, but the move alone may have had the effect of weakening stimulus effect.”
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 extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.