AUD/JPY rises above 91.00 following key economic data from Australia, Japan

AUD/JPY advances as the Australian Dollar strengthens on CPI data from Australia and PMI figures from China.
Australian Treasurer Jim Chalmers remarked that markets continue to expect further interest rate cuts despite the inflation uptick.
The Japanese Yen softens amid weaker-than-expected industrial production and retail sales data from Japan.

Akhtar Faruqui FXStreet

AUD/JPY edges higher after registering gains in the previous two sessions, trading around 91.30 during the Asian hours on Wednesday. The currency cross is supported by a stronger Australian Dollar (AUD), buoyed by inflation data out of Australia and mixed Purchasing Managers’ Index (PMI) data from China.

Australia's Consumer Price Index (CPI) rose 0.9% quarter-over-quarter in Q1 2025, up from 0.2% in Q4 2024 and exceeding expectations of a 0.8% rise, according to the Australian Bureau of Statistics (ABS). On an annual basis, CPI climbed 2.4% in Q1, beating the forecast of 2.2%. Monthly CPI held steady at 2.4% in March year-over-year, while the Reserve Bank of Australia’s (RBA) Trimmed Mean CPI rose 2.9% year-over-year.

Despite the stronger inflation print, Australian Treasurer Jim Chalmers noted that markets still anticipate further interest rate cuts. “The market expects more interest rate cuts after inflation figures,” he stated, adding that there’s “nothing in these numbers that would substantially alter market expectations.”

Meanwhile, in China, the latest data added to concerns over economic momentum. The National Bureau of Statistics (NBS) reported that the Manufacturing PMI dropped to 49.0 in April from 50.5 in March, falling below the 49.9 consensus and signaling a return to contraction. The Non-Manufacturing PMI also slipped to 50.4 from 50.8, missing the expected 50.7.

On Japan’s side, the Japanese Yen (JPY) continues to weaken on the back of disappointing economic data. Industrial production in March fell 1.1% month-over-month, reversing a 2.3% gain in February and missing the expected 0.4% decline. It marks the second drop in 2025 amid growing concerns about the impact of potential US tariffs.

Retail Sales in Japan rose 3.1% year-over-year in March, below forecasts of a 3.5% increase but still marking the 36th consecutive month of expansion. Although consumption remains supported by rising wages, the slower pace of growth may signal mounting headwinds.

Economic Indicator

RBA Trimmed Mean CPI (QoQ)

The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a quarterly basis, measures the changes in the price of a fixed basket of goods and services acquired by household consumers. The QoQ reading compares prices in the reference quarter to the previous quarter. The trimmed mean, which is a measure of underlying inflation, is calculated as the weighted average of the central 70% of the quarterly price change distribution of all CPI components in order to smooth the data from the more-volatile components. Generally, a high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.

Why it matters to traders?

The quarterly Consumer Price Index (CPI) published by the Australian Bureau of Statistics (ABS) has a significant impact on the market and the AUD valuation. The gauge is closely watched by the Reserve Bank of Australia (RBA), in order to achieve its inflation mandate, which has major monetary policy implications. Rising consumer prices tend to be AUD bullish, as the RBA could hike interest rates to maintain its inflation target. The data is released nearly 25 days after the quarter ends.

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Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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