Japanese Yen and Aussie Dollar News: US CPI Report Crucial for Price Trends

USD/JPY: Machine Tool Orders in Focus

Traders are bracing for volatility in USD/JPY on February 12 as machine tool orders provide fresh insight into Japan’s economic outlook.

Economists forecast machine tool orders to rise 1.6% year-on-year in January, down sharply from 11.2% in December. Order trends can give traders insights into Japan’s business investment and industrial production outlook.

A pullback in orders may signal deteriorating manufacturing sector conditions, which could impact employment and wages. Softer wage growth could curb household spending, potentially dampening demand-driven inflationary pressures. The USD/JPY could move toward 153 on weaker tool orders.

Conversely, robust orders may suggest a resilient demand environment, bolstering the labor market and wage growth. Robust orders may support a USD/JPY fall below the 200-day Exponential Moving Average (EMA).

While the machine tool data offers a snapshot of Japan’s manufacturing sector, the services sector and wage trends will have more influence on the Bank of Japan’s rate path. Recent wage growth figures have reinforced expectations for another BoJ rate hike, surging 4.8% year-on-year in December (November: 3.3%).

Global Markets Investor commented:

“Expect MORE rate hikes in Japan this year: Japanese wages, key indicator for the Bank of Japan’s policy decisions grew 4.8% in December, the FASTEST pace in ~3 DECADES.”

USD/JPY Trends: US CPI Report in Focus

Shifting to the US, the crucial US CPI Report will impact US dollar demand and the USD/JPY pair’s trajectory. Economists expect the core inflation rate to ease from 3.2% in December to 3.1% in January.

A softer reading may revive expectations of an H1 2025 Fed rate cut, potentially dragging the USD/JPY pair below 200-day EMA, targeting the 149.358 support level. Conversely, a pickup in inflationary pressures would likely reduce bets on a Fed rate cut. This could push the pair above 153, with the 50-day EMA a potential upside target.

Beyond the data, Fed Chair Powell will deliver a second day of testimony on Capitol Hill. Any deviation from Tuesday’s script needs consideration.

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

AUD/USD: Housing Data and RBA Policy in Focus

For the Australian dollar, home loan data will spotlight the AUD/USD pair. Economists expect home loans to rise 0.6% quarter-on-quarter in Q4 2024, up from 0.1% in Q3 2024. Additionally, economists predict investment lending for homes will rebound in Q4 2024.

Rising home loans signal tighter housing inventories and stronger consumer spending. Tighter housing inventories may drive house prices and rentals higher, fueling housing services inflation. A pickup in consumer spending may also drive inflationary pressures. Under this scenario, investors may lower expectations of multiple RBA rate cuts in H1 2025.

Conversely, weaker home loans and investment loan data may indicate a softer housing market. House prices and rentals could fall, impacting consumer spending and cooling inflationary pressures.

Rising bets on multiple H1 2025 RBA rate cuts may pull the AUD/USD pair toward the $0.62 level. However, a more hawkish RBA rate path may lift the pair above the 50-day EMA, targeting the $0.63623 resistance level.

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, hotter-than-expected inflation figures would indicate a more hawkish Fed policy stance. Fading bets on an H1 2025 Fed rate cut may widen the US-Australia interest rate differential in favor of the US dollar. A more hawkish Fed could drag the AUD/USD pair toward the crucial $0.62 support level. A break below $0.62 may bring the upper trend line of the descending channel into play.

Conversely, a softer core CPI reading may narrow the interest rate differential, potentially lifting the pair above the 50-day EMA. A breakout from the 50-day EMA could enable the bulls to target the 200-day EMA next.

Meanwhile, US tariffs and the threat of a full-blown US-China trade war remain an Aussie dollar headwind.

Market Trends: Central Banks and Trade Policies in Focus

Key macro drivers dictating currency trends include:

• BoJ forward guidance, which will influence Japanese Yen demand and USD/JPY trends.
• US inflation data, impacting the US dollar’s trajectory.
• AUD/USD sensitivity to housing inflation, US-China trade tensions, and RBA policy shifts.

Additionally, China’s economic stimulus measures could impact market sentiment in the coming weeks. Fresh stimulus measures targeting domestic consumption could help offset the negative impact of US tariffs on the Aussie dollar.

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