Japanese Yen and Australian Dollar News: PBoC and the BoJ in the Spotlight…

Recently, Japan’s Services PMI, a key indicator, fell from 53.7 in August to 53.1 in September, disappointing investors. Trade data highlighted a weakening demand, with exports declining by 1.7% year-on-year in September after a 5.5% rise in August.

Considering the macroeconomic environment, the BoJ will unlikely raise interest rates until Q1 2025. A recent Reuters poll showed that 25 out of 49 economists polled expect the BoJ to maintain interest rates through Q4 2024, and notably, 39 of 45 expect the BoJ to raise interest rates to 0.5% by March 2025.

Political pressures are also a factor. Japan’s new Prime Minister, Shigeru Ishiba, poured cold water on rate hike expectations, saying the country was not ready for it.

This week, Services PMI and inflation figures for Tokyo could give markets more reasons to write off a Q4 2024 BoJ rate hike.

Economists expect the Jibun Bank Services PMI to fall from 53.1 in September to 52.7 in October. Bank of Japan Governor Kazuo Ueda considers services sector prices crucial for inflation and the BoJ rate path. Furthermore, economists forecast Tokyo’s core inflation rate to fall from 2.0% to 1.7%, below the BoJ’s 2% target.

Considering the USD/JPY’s recent return to 150, investors should monitor BoJ commentary. Calls to maintain interest rates through Q4 2024 could further impact the Yen, potentially driving the USD/JPY toward 151.