AUD/USD, NZD/USD Under Pressure; USD/JPY Stable on US Dollar Strength

Aussie Pressured by Mixed Data

Australian retail sales rose by 0.8% MoM in November, as illustrated in the chart below. While the chart highlights a consistent increase in retail sales over the past eight months, the November figure fell short of the expected 1% gain. This shortfall continues to weigh on the Australian Dollar. Despite positive trade balance data, the Reserve Bank of Australia’s dovish stance and China’s economic challenges further weaken the Aussie. Moreover, the strength of the US labour market and the possibility of emergency tariffs from Trump add further downward pressure on the Australian Dollar.

The US initial jobless claims dropped to 201K, coming in below expectations, while ADP reported slower-than-expected private job gains of 122K. Australia’s weighted CPI edged slightly higher; however, the trimmed mean showed a decline.

Japanese Wage Surge Fuels Yen Strength

Japanese base salary data reveals that wages have risen at the fastest pace in 32 years. The chart below shows that nominal wages in Japan rose by 3% year over year in November 2024. This increase supports the case for the Bank of Japan (BoJ) to raise interest rates, strengthening the safe-haven Japanese Yen.

However, despite higher nominal wages, real wages fell by 0.3% year-on-year in November, extending a negative real wage growth trend. This divergence complicates the BoJ’s policy decisions, as it has emphasized the need for sustained wage increases to justify monetary tightening.

While the Yen gains strength from domestic factors, the USD/JPY remains supported by US data and Federal Reserve signals. The release of the December FOMC meeting minutes revealed a cautious approach but reinforced expectations of a strong labour market. These expectations bolstered the US Dollar, putting pressure on AUD/USD and NZD/USD while strengthening USD/JPY. The USD/JPY pair is currently trading at around the 158 level and awaiting upcoming US Nonfarm Payrolls data and Japanese household spending figures for further direction.

AUD/USD Analysis – Descending Channel

The 4-hour chart for AUD/USD shows that the pair is trading within a descending channel, remaining under bearish pressure. The rebound in the pair, which was initiated after the release of the S&P Global Australia Services PMI, encountered strong resistance at the channel’s resistance line. After hitting this resistance, the pair continued to trade lower. Strong support is observed around the $0.61 level.

NZD/USD Analysis – Symmetrical Broadening Wedge Pattern

The 4-hour chart for NZD/USD shows that the pair rebounded from the long-term support region of $0.55-$0.56 and hit the descending channel’s resistance. This resistance is further strengthened by the intersection of the symmetrical broadening wedge line, which pushed the price lower towards the $0.56-$0.55 support zone. This support zone represents a long-term area where the price will likely consolidate before moving within this range. The strength of the US dollar is likely to maintain bearish pressure on the pair.

USD/JPY Analysis – Consolidations

The 4-hour chart for USD/JPY shows that the pair is trading within a bullish price structure and has formed an inverted head and shoulders pattern around the $148 support level. After establishing support at $148, the price rallied and consolidated within the $156 to $158 range. The consolidation in USD/JPY has strengthened the bullish outlook. The strength of the US dollar further supports this upward momentum. However, the USD/JPY remains within the consolidation phase and is waiting for the release of U.S. NFP data on Friday.