Australian Dollar edges lower after jobs data as JPY draws support from intervention fears

The AUD/JPY cross attracts some sellers following the release of the latest Australian employment details and slides closer to its lowest level since late April, touched the previous day. Spot prices currently trade just below mid-111.00s, down around 0.20% for the day, and seem vulnerable to extend the recent retracement slide from the vicinity of the 115.00 psychological mark, or the highest level since 2007 set earlier this month.

The Australian Bureau of Statistics (ABS) reported that the Unemployment Rate fell as anticipated, to 4.4% in May from 4.5% in the previous month. Additional details revealed that the number of employed people rose to 40.3K compared to consensus estimates for a 25K increase. The previous month's reading, however, was revised down to show that the economy shed 40.7K jobs. This comes on top of Wednesday's mixed Australian consumer inflation figures, which, along with the cautious market mood, undermine the risk-sensitive Australian Dollar (AUD) and weigh on the AUD/JPY cross.

Meanwhile, heightened speculation of joint US-Japan currency intervention offers some support to the Japanese Yen (JPY) and further exerts pressure on the currency pair. In fact, Japan's Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent agreed to take steps on currencies if necessary. Also, Japan’s Chief Cabinet Secretary Minoru Kihara said on Tuesday that he will take appropriate action against the foreign exchange moves if needed. This, along with a hawkish Bank of Japan (BoJ), benefits the JPY and contributes to the weaker tone around the AUD/JPY cross.

In fact, Minutes of the BoJ's April meeting showed last week that some board members called for raising rates ‌more swiftly to avoid underlying inflation from overshooting. Adding to this, the Summary of Opinions from the June meeting revealed that policymakers debated mounting inflation risks, with some calling for faster interest rate increases to raise borrowing costs nearer ‌levels deemed neutral to the economy. Furthermore, BoJ board member Naoki Tamura said earlier today that it is important to push the policy rate closer to the neutral level, which is about 2%.

Nevertheless, Japan's borrowing costs remain lower than those of peer nations, including Australia. In fact, traders are still pricing in a roughly 15 basis point (bps) of additional tightening by the Reserve Bank of Australia (RBA) for the remainder of the year. This might hold back traders from placing aggressive bearish bets on the AUD/JPY cross and help limit further losses. That said, this week's breakdown below the 100-day Simple Moving Average (SMA), for the first time since June 2025, suggests that the path of least resistance for spot prices remains to the downside.