Japanese Yen and Aussie Dollar News: China PMIs in Focus Amid Trump’s Tariff Shifts

Will Japan’s LEI trigger a USD/JPY breakout?

On Monday, January 27, Japan’s Leading Economic Index (LEI) will spotlight the USD/JPY pair after Friday’s Bank of Japan rate hike. Preliminary data showed the LEI dropped from 109.1 in October to 107.0 in November.

A downward revision toward 105 could temper market bets on a second H1 2025 BoJ rate hike. The LEI gives traders insights into business and consumer sentiment, key indicators for wage growth trends, and household spending.

Waning business sentiment could impact wages, while softer consumer sentiment may affect household spending. This scenario may dampen demand-drive inflationary pressures, supporting a less hawkish BoJ rate path.

Conversely, an unexpected increase in the LEI could support higher wages and consumption, supporting further rate hikes.

USD/JPY Trends: US Economic Data in Focus

Shifting to the US, the Dallas Fed Manufacturing Index and Chicago Fed National Activity Index will influence USD/JPY price trends.

Economists forecast the Chicago Fed National Activity Index to rise from -0.12 in November to +0.1 in December. Markets expect the Dallas Fed Manufacturing Index to rise modestly to 4.0 in January, up from 3.4 in December.

Upbeat numbers would signal a pickup in economic activity, favoring a more hawkish Fed rate path and a USD/JPY move toward the 156.884 resistance level. Conversely, weaker numbers may support President Trump’s call for lower rates, potentially dragging the USD/JPY pair below the 50-day Exponential Moving Average (EMA).

For a comprehensive analysis of USD/JPY trends and trade data insights, visit our detailed reports here.

The AUD/USD: China’s Economy Under Scrutiny

For the Australian dollar, China’s private sector PMI numbers could impact the AUD/USD pair.

Economists forecast the NBS Manufacturing PMI to remain at 50.1 in January while projecting a drop in the Non-Manufacturing PMI. Lower-than-expected PMI readings could signal a weakening demand environment, potentially affecting Aussie trade terms.

With a trade-to-GDP ratio of over 50% and one-third of exports bound for China, the Aussie economy and RBA policy outlook remain sensitive to China’s economic health. A pullback in private sector activity would support a more dovish RBA policy outlook, potentially dragging the AUD/USD pair toward $0.62.

Conversely, a pickup in private sector activity could bolster the Aussie economy, signaling a less dovish RBA stance. Under this scenario, the AUD/USD pair could break above the 50-day EMA, targeting the $0.63623 resistance level.

In December, RBA Governor Michele Bullock highlighted the influence of China’s economy on monetary policy, stating:

“US moves against China could affect Aussie trade terms with China, potentially impacting the Aussie economy.”

For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.

Australian Dollar Daily Chart

Turning to the US session, upbeat US economic data could signal a widening US-Australia interest rate differential in favor of the US dollar. The AUD/USD pair could fall toward the $0.62 level and the upper band of the descending channel on a more hawkish Fed rate path.

Conversely, weak data could give US President Trump more reasons to push the Fed into a rate cut. A less hawkish Fed rate path could drive the AUD/USD pair above the 50-day EMA. A break above the 50-day EMA could signal a move toward the $0.63623 resistance level.

Global Market Trends: Central Banks in Focus

Central bank action remains the primary driver for currency trends. The BoJ’s forward guidance could increase USD/JPY sensitivity to Japan’s economic data, particularly as fears of a hawkish Fed rate stance subside. Meanwhile, Aussie dollar demand hinges on this week’s inflation data and RBA rate path.

Broader themes, including US tariffs and China’s stimulus strategies, will further dictate global market sentiment.

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