AUD/JPY holds positive ground above the 94.60 mark following the Japanese/Australian data

The AUD/JPY cross holds positive ground for the second consecutive day. The cross attracts some buyers following the Reserve Bank of Australia (RBA) Minutes and the economic data releases from Australia and Japan. AUD/JPY currently trades near 96.65, gaining 0.26% for the day.

The minutes of the August policy meeting of the Reserve Bank of Australia (RBA) stated that the current policy stance is to keep interest rates unchanged. However, policymakers agreed that additional tightening may be necessary. On Tuesday, the Australian Bureau of Statistics (ABS) showed that the Wage Price Index (Q2) grew 0.8% QoQ versus 0.9% expected and 0.8% prior. On a yearly basis, the Australian Wage Price Index increased by 3.6%, below market expectations of a 3.7% increase.

About the Chinese data, the People's Bank of China (PBOC) cut the one-year medium-term Lending Facility (MLF) rate from 2.65% to 2.50% on Tuesday. The unexpected rate cuts by the People's Bank of China (PBOC) fuel fears about China's deteriorating economic outlook and might limit the upside for the Aussie. Meanwhile, Chinese Retail Sales for July came in at 2.5% YoY compared to 4.8% expected and 3.1% previously, while the country's Industrial Production fell to 3.7% YoY compared to 4.5% expected and 4.1% previously.

On the Japanese Yen front, the preliminary data of the Gross Domestic Product (GDP) figures for the second quarter (Q2) of 2023 shows that economic growth in Japan came in at 1.5% QoQ, versus 0.8% expected and 0.7% previously. Meanwhile, the annualised GDP increased to 6.0%, compared to 3.1% estimated and 2.7% previously. Following the stronger than expected data, Japan’s Economy Minister Shigeyuki Goto stated that he anticipated a moderate economic recovery before mentioning the need to pay attention to the danger of a global downturn and the impacts of price increases. Goto demonstrated a willingness to respond flexibly to the economy and prices as needed.

Looking ahead, market participants will shift their focus to the Australian employment data due on Thursday. Also, Japanese Trade data and annual National Consumer Price Index for July will be released from the Japanese docket later this week.