The AUD/JPY cross gains momentum above the mid-94.00s during the Asian trading hours on Thursday. The cross currently trades near 94.74, up 0.04% on the day. The monetary policy gap between the US and Japan is still the factor behind the yen's weakness.
The Australian Bureau of Statistics revealed on Thursday that the nation’s Private Capital Expenditure for the second quarter rose 2.8% from 2.4% previous reading. The figure came in better than the expectation of 1.2%. Meanwhile, the Private Sector Credit MoM expanded by 0.3% against the previous month of 0.2% and matched the market consensus of 0.3%. The Aussie is firmer against the Japanese Yen despite the mixed Australian reading.
The latest data from Japan’s Ministry of Economy, Trade and Industry reported that Retail Sales rose by 6.8% YoY in July versus 5.6% prior, better than the expectation of 5.4%. On the other hand, Industrial Production dropped by 2.0% MoM in July from a rise of 2.4% in the previous month, compared to market consensus of a 1.4% drop.
The Bank of Japan (BoJ) Governor Kazuo Ueda stated at a Federal Reserve symposium on Saturday that the central bank considers underlying inflation remain below its target and will therefore maintain the current ultra-loose monetary policy framework. According to policymakers, domestic demand is still robust and corporate fixed-investment is fueled by record high profits. However, the monetary policy differential between the US and Japan is the main driver of the Yen's weakening.
Looking ahead, the Australian S&P Global Manufacturing PMI for August and the Japanese Jibun Bank Manufacturing PMI will be released on Friday. Traders will take cues from these data and find trading opportunities around the AUD/JPY cross.
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