The AUD/JPY pair extended its winning streak for the fourth consecutive day, trading around 97.10 during early European hours on Thursday. The Australian Dollar (AUD) found support from the latest labor market report, which showed resilient employment data.
Australian Employment Change increased by 47.5K in August, down from 58.2K in July but significantly exceeding the consensus forecast of 25.0K. Meanwhile, the Unemployment Rate remained steady at 4.2%, aligning with market expectations and matching the previous month’s figure, according to the Australian Bureau of Statistics (ABS).
The US Federal Reserve’s 50 basis point rate cut on Wednesday boosted market sentiment, benefiting risk-sensitive currencies like the Australian Dollar. However, Fed Chair Jerome Powell’s comments tempered the market’s optimism, preventing a stronger risk-on environment. Powell noted that the Fed is not in a rush to ease policy further and highlighted that half-percentage point rate cuts are not indicative of a new policy pace. Additionally, Fed officials raised their long-term forecast for the federal funds rate from 2.8% to 2.9%.
The upside potential for the AUD/JPY pair may be constrained by the Japanese Yen (JPY), which remains supported by a hawkish stance surrounding the Bank of Japan (BoJ). Traders are closely watching the BoJ’s policy decision, with expectations that rates will remain unchanged, while leaving the door open for potential future rate hikes.
Moreover, Japan’s upcoming National Consumer Price Index (CPI) data will be under scrutiny, as the inflation report could provide fresh insights into the BoJ’s future interest rate path, influencing the JPY and the broader direction of the AUD/JPY cross.
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