Japanese Yen and Aussie Dollar News: Services PMIs and Aussie GDP in Focus

Crucial Services PMI Survey and the BoJ in the Spotlight

With Japan’s services sector commanding over 70% of GDP, Wednesday’s PMI release could be the linchpin in the Bank of Japan’s policy shift. Traders are bracing for a decisive move in USD/JPY, with the potential to dictate rate expectations on both sides of the Pacific.

An upward revision to Japan’s PMI, particularly in employment and price trends, would support a more hawkish BoJ rate path. Japan’s services sector accounts for over 70% of GDP. More significantly, the BoJ relies on the sector to drive underlying inflationary pressures. A more hawkish BoJ stance could pull the USD/JPY pair toward the March 4 low of 148.089.

Conversely, a lower headline PMI reading, weaker employment, and easing input prices may delay a BoJ rate hike. Under this scenario, the USD/JPY pair may move toward the 200-day Exponential Moving Average (EMA) and the 152 level.

Amid increasing uncertainty about the timing of a BoJ rate hike, partly stemming from US tariff policies, traders should also monitor BoJ commentary.

Bank of Japan Deputy Governor Shinichi Uchida will speak on Wednesday morning. His views on consumer spending, the economic outlook, inflation, wages, and US tariffs will be key.

Expert Views on the Bank of Japan’s Policy Outlook

Market speculation about the timing of a BoJ rate hike has intensified as inflation and wage growth continue to trend higher.

Neil Sethi, Managing Partner at Sethi Associates, commented:

“BoA (Hartnett): We said look at Japan wage growth, highest since 1991 (5.3%) Japanese deflation morphing into inflation and BoJ needs to hike rates multiple times in 2025 given real rates – 5%, so Japanese Yen going a lot higher given market has just one BoJ hike prices in; all of this not positive global risk (Japanese capital repatriation), nor Nikkei, with big exception of Japan banks.”

Increasing speculation about multiple 2025 BoJ rate hikes could strengthen the Yen, pushing USD/JPY toward the September low of 139.576 and potentially triggering a Yen carry trade unwind.

USD/JPY Trends: US Services Sector and Labor Market in Focus

Later in the US session, two crucial reports will influence Fed rate cut bets and USD/JPY trends.

Economists expect the ADP to report an increase of 140k jobs in February, down from 183k in January. A softer reading would signal weakening labor market conditions, boosting bets on an H1 2025 Fed rate cut. However, a stronger-than-expected report could signal a more hawkish Fed stance.

Meanwhile, economists forecast the ISM Services PMI to increase to 52.9 in February, up from 52.8 in January. A surprise drop below the 50 neutral level could fuel recession fears, supporting a more dovish Fed rate path. Conversely, a higher-than-expected reading may delay Fed rate cuts.

Upbeat US data would likely temper expectations of a June Fed rate cut, supporting a USD/JPY climb toward the 200-day Exponential Moving Average (EMA) and the 152 level. Conversely, a service sector contraction and a weaker labor market could drag the USD/JPY below 148.

Beyond the numbers, investors should closely monitor US tariff policies and FOMC members’ views on inflation, employment, and the Fed’s rate path.

Explore in-depth USD/JPY trade setups and expert forecasts here.

AUD/USD: Aussie Economy and the RBA in Focus

Aussie GDP numbers, on March 5, will influence the AUD/USD pair’s trajectory and RBA policy expectations. Economists forecast the economy to expand by 0.5% quarter-on-quarter in Q4 2024. A stronger-than-expected GDP reading could temper bets on a second RBA rate cut, potentially driving the AUD/USD pair toward $0.63 and the 50-day EMA.

Conversely, weaker growth figures may boost expectations for an H1 2025 RBA rate cut. A more dovish RBA stance may drag the AUD/USD pair toward $0.62.

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

Australian Dollar Daily Chart

In the US session, strong US economic data could sink bets on a June Fed rate cut. A more hawkish Fed would widen the US-Aussie interest rate differential, favoring the US dollar. A wider rate differential could send the AUD/USD pair toward $0.62, a crucial support level in recent sessions.

Conversely, a US service sector contraction and slump in employment could fuel expectations of multiple Fed rate cuts. A dovish Fed rate path would narrow the rate differential, driving the AUD/USD pair toward $0.63 and the 50-day EMA.

Market Trends: Central Banks and Trade Policies in Focus

Key macroeconomic drivers influencing currency markets include:

• BoJ Forward Guidance: Stronger Japanese economic data could fuel bets on a BoJ rate hike, supporting a more hawkish BoJ.
• US Economic Data and Tariff Policies: Services PMI, labor market data, and US tariff policies will influence US dollar demand.
• AUD/USD Outlook: Aussie inflation, wage trends, unemployment, and US-China trade tensions will influence RBA policy expectations.

Click here to read expert USD/JPY and AUD/USD forecasts for deeper insights.