Japanese Yen and Aussie Dollar News: Retail Sales and China PMIs in Focus

Japan’s Data and US Tariffs Set the Stage for Yen Volatility

On Monday, March 31, retail sales and industrial production draw market focus to the USD/JPY and the Bank of Japan. Economists forecast retail sales to rise 2% year-on-year in February, easing from 3.9% in January.

Weaker-than-expected retail sales could temper BoJ rate hike bets. Softer consumer spending could dampen demand-driven inflation, potentially easing pressure on the BoJ to make a move. Conversely, a higher print may indicate that rising wages are feeding into consumption, supporting a more hawkish BoJ rate path.

Economists expect industrial production to jump 2.3% month-on-month in February, reversing a 1.1% fall in January. A February rebound could reflect firms front-loading ahead of anticipated US tariffs. As such, markets may discount February’s data, with April’s figures likely to have more impact on Japanese Yen demand.

Expert Views on the BoJ Policy Outlook

Despite potential weakness in retail sales, rising wages may keep BoJ rate hike expectations intact. Amid economic uncertainties, Global Markets Investor speculated about a May BoJ rate hike, stating:

“BRACE for more Bank of Japan rate hikes: Average monthly wages in Japan rose by 3.1% year-over-year, the fastest rate in 32 YEARS. In line with surging inflation, this gives a green light for BoJ to hike in May.”

While a July hike was previously expected, growing speculation about a May move could lift Japanese Yen demand.

USD/JPY Trends to Watch:

• Bullish Yen scenario: Higher-than-expected retail sales could drag the USD/JPY pair toward the 149.358 support level and possibly 149 on hawkish BoJ bets.
• Bearish Yen Scenario: An unexpected fall in retail sales and industrial production could sink bets on an H1 2025 BoJ rate hike, driving the pair toward the 50-day EMA and 151.

US Economic Data and USD/JPY Outlook

Later in the US session, the Dallas Fed Manufacturing Index and Chicago PMI will offer insights into domestic demand.

• Upbeat numbers could further lower bets on an H1 2025 Fed rate cut. A more hawkish Fed stance could drive the USD/JPY pair toward the March 28 high of 151.208.
• Weaker data may revive concerns over a potential US recession, supporting multiple Fed rate cut bets. In this scenario, the USD/JPY may drop below the 149.358 support level, possibly toward 149.

Outside of economic data, tariff developments and FOMC member commentary will remain key drivers of USD/JPY moves.

Explore expert forecasts and trade setups for USD/JPY in our latest market analysis here.

Aussie Dollar Outlook: China PMI and Trade Risk in Focus

Shifting to AUD/USD, China’s economy remains a key influence on market risk sentiment and demand for commodity-linked currencies.

A higher NBS Manufacturing PMI reading would signal an improving demand environment, potentially boosting the Aussie dollar. Given China accounts for one-third of Aussie exports, a pickup in output would be a bullish signal. However, a softer Manufacturing PMI print may signal weakening demand, weighing on Aussie dollar demand.

Manufacturing sector data from China is crucial, given Australia has a trade-to-GDP ratio above 50%. However, concerns about US tariffs on global demand could limit the positive effect of upbeat Chinese data on the Aussie dollar.

Following a 25% tariff on all vehicle imports into the US, markets are also watching for reciprocal tariffs. Rising trade tensions could hurt sentiment and support a more dovish RBA outlook.

In February, RBA Governor Michele Bullock commented on global trade and tariffs, stating:

“Global trade uncertainties and tariff threats remain unpredictable, with economic impacts dependent on implementation and market reactions.”

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

Australian Dollar Daily Outlook: US Economy and Tariffs in Focus

During the US session, upbeat US economic indicators could curb multiple Fed rate cut expectations. A more hawkish Fed rate path may widen the US-Aussie interest rate differential in favor of the US dollar. In this scenario, the AUD/USD could drop toward $0.62500.

Conversely, weaker data may raise concerns about the US economy, supporting a more dovish Fed rate path. A narrowing in the rate differential could drive the AUD/USD pair above the 50-day EMA, bringing the $0.63623 resistance level into play.

Investors should also monitor tariff-related updates. A further escalation in the global trade war could trigger a flight to safety, driving US dollar demand. Risk-off sentiment would weigh on the AUD/USD pair, bringing sub-$0.62500 levels into view.

Key Market Trends

The main drivers of the forex market include:

• USD/JPY: Retail sales, labor market trends, household spending, and BoJ guidance amid rising May rate hike bets.
• USD/JPY and AUD/USD: US labor market and Services PMI data.
• AUD/USD: China PMI data, Beijing’s stimulus measures, and global trade tensions.

Don’t miss today’s trade setups in our full USD/JPY and AUD/USD reports.