AUD/JPY holds ground near 97.00 following solid Australia Trade Balance data

AUD/JPY is poised to continue its winning streak that began on August 21, trading around 96.80 during the Asian hours on Thursday. The currency cross moves little following the release of stronger-than-expected Australia’s Trade Balance data.

However, the AUD/JPY cross may further appreciate as the Australian Dollar (AUD) may regain its ground against its peers as solid July Trade Surplus, along with robust Q2 GDP figures eased expectations of additional Reserve Bank of Australia (RBA) rate cuts, with swaps now assigning nearly a 90% probability that the central bank will keep policy unchanged in late September.

The Australian Bureau of Statistics (ABS) reported that the Trade Balance increased to 7,310 million month-over-month in July, from 5,366 million (revised from 5,365 million) the prior month. The Trade Surplus widened, defying expectations for a decline to 4,920 million. Australia's Exports rose by 3.3% MoM in July from 6.3% (revised from 6.0%) seen prior. Meanwhile, Imports declined by 1.3% MoM, compared to a fall of 1.5% (revised from -3.1%) seen in June.

The Australian Bureau of Statistics reported on Wednesday that Gross Domestic Product (GDP) rose 0.6% quarter-over-quarter in Q2, following the 0.3% growth in Q1 and surpassing the expectations of 0.5% expansion. Meanwhile, the annual Q2 GDP grew by 1.8%, compared with the 1.4% growth in Q1, and was above the consensus of a 1.6% increase.

The Bank of Japan (BoJ) Governor Kazuo Ueda reaffirmed on Wednesday that the policy path for rate hikes remains intact, provided growth and inflation evolve as expected. Investors now look to Friday’s wage data for additional policy signals.

Japan’s trade negotiator Ryosei Akazawa noted on Thursday that he was visiting the United States (US) as administrative talks progress. Akazawa further added that he will continue to push for a presidential order for the tariffs that have been agreed on.