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Japanese Yen and Aussie Dollar News: Yen Carry Trade and China Exports in Focus
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Key Points:
- USD/JPY Drops Below 148 as JGB Yields Hit 15-Year Highs – Rising rate hike bets and Fed cut speculation pressure the yen carry trade.
- BoJ Faces Dilemma as JGB Yields Rise and USD/JPY Slides – Intervention threats could drive the yen stronger or trigger volatility.
- China’s Trade Data to Steer AUD/USD Amid Tariff Concerns – A weaker-than-expected export print may weigh on the Aussie dollar.
USD/JPY Drops Below 148 – Yen Carry Trade Unwind Chatter Grows
10-year Japanese Government Bond (JGB) yields climbed to their highest level since 2009 on Thursday, March 6, sending the USD/JPY below 147.5. The USD/JPY pair last dropped below 147.5 during the August 2024 Yen carry trade unwind that sent the pair to a 2024 low of 139.576.
Rising expectations for a Bank of Japan rate hike and the potential for multiple 2025 Fed rate cuts are narrowing the US-Japan interest rate differential, weighing on USD/JPY.
Expert Views on the Rengo Survey and a Potential Yen Carry Trade Unwind
While some speculate that the Yen carry trade was fully unwound in 2024, other economists argue that markets remain exposed to a stronger Japanese Yen.
TradeTheNews.com (TTN) issued a research alert highlighting the risk of another Yen Carry Trade Unwind, stating:
“According to the latest CFTC data, speculative net-short positions in yen futures have surged to levels not seen since August 2024. While the scale of current speculative positioning hasn’t yet reached the extremes seen last summer, the risk of another bruising unwind is growing.”
TTN concluded:
“Today’s market setup bears some striking similarities. The USD/JPY remains under pressure, and any deviation from expectations—whether from the BoJ or US macroeconomic data—could prompt another violent unwind.”
Spring Wage Negotiations Fuel Carry Trade Unwind Risks
The Bank of Japan may have limited options to counter rising JGB yields. President Trump has warned Japan against weakening the Yen, calling it unfair to US manufacturers. The threat could make BoJ Governor Kazuo Ueda and Japan’s government reconsider bond market intervention threats. This exposes the USD/JPY to further losses as the spring wage negotiations (Shunto) take center stage.
Meanwhile, Rengo, Japan’s leading national trade union center, pointed to the largest wage hike in over 30 years. Another wage surge could fuel BoJ rate hike expectations, increasing the risk of a carry trade unwind and market disruption.
On Friday, March 7, traders should monitor Bank of Japan commentary. Intervention threats could drive the USD/JPY pair toward 150. Conversely, BoJ silence may see the pair test 145.
USD/JPY Trends: US Jobs Report in Focus
Later in the US session, the US Jobs Report could provide insights into the Fed rate path and USD/JPY trends. Economists forecast a steady 4% unemployment rate and 4.1% year-on-year average hourly earnings growth in February.
Softer-than-expected wage growth and higher unemployment could drive expectations for a June Fed rate cut, potentially dragging USD/JPY toward 147.5. Conversely, tighter labor market conditions and rising wages may sink bets on a June move, driving the USD/JPY pair toward 150, a key resistance level.
Beyond the jobs data, investors should closely monitor tariff developments and FOMC members’ views on inflation, employment, and the Fed’s rate path.
Explore in-depth USD/JPY trade setups and expert forecasts here.
China Trade Data and Its Impact on the Aussie Economy
On Friday, March 7, China’s trade data will be a key driver for the AUD/USD pair. Economists forecast China’s exports to rise 5% year-on-year in February after surging 10.7% in January.
A lower-than-expected reading could signal waning demand ahead of Trump’s Executive Order, which raised tariffs on China to 20% in March. Conversely, a higher export print may reinforce confidence in China’s economic outlook, supporting the Aussie economy and the Aussie dollar.
Since China accounts for one-third of Australia’s exports and trade contributes over 50% to Australia’s GDP, AUD/USD is highly sensitive to these figures.
- A strong trade report could push AUD/USD above the $0.63623 resistance level, targeting $0.64.
- A weak report may send AUD/USD toward the 50-day EMA and the crucial $0.63 support level.
For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.
Australian Dollar Daily Chart
Later in the US session, a stronger-than-expected US Jobs Report could curb June Fed rate cut bets. A more hawkish Fed stance could widen the US-Aussie interest rate differential, favoring the US dollar. Under this scenario, the AUD/USD pair may drop to the 50-day EMA and the $0.63 level.
Conversely, weaker labor market data could signal expectations for multiple Fed rate cuts. A more dovish Fed rate path may narrow the rate differential, potentially driving the AUD/USD pair toward $0.64 and the 200-day EMA.
Market Trends: Central Banks and Trade Policies in Focus
Key macroeconomic drivers influencing currency markets include:
- BoJ Forward Guidance: Intervention threats, inflation trends, and rate path expectations.
- US Economic Data and Tariff Policies: The US Jobs Report and tariff developments.
- AUD/USD Outlook: China’s trade data, Beijing’s stimulus measures, and US-China trade tensions will influence RBA policy expectations and Aussie dollar demand.
Read expert USD/JPY and AUD/USD forecasts here for deeper insights.
The Bank of Japan may have limited options to counter rising JGB yields. President Trump has warned Japan against weakening the Yen, calling it unfair to US manufacturers. The threat could make BoJ Governor Kazuo Ueda and Japan’s government reconsider bond market interventions. This exposes the USD/JPY to further losses as the spring wage negotiations (Shunto) take center stage.
Meanwhile, Rengo, Japan’s leading national trade union center, pointed to the largest wage hike in over 30 years. Another wage surge could fuel BoJ rate hike expectations, increasing the risk of a carry trade unwind and market disruption.
On Friday, March 7, traders should monitor Bank of Japan commentary. Intervention threats could drive the USD/JPY pair toward 150. Conversely, BoJ silence may see the pair test 145.
USD/JPY Trends: US Jobs Report in Focus
Later in the US session, the US Jobs Report could provide insights into the Fed rate path and USD/JPY trends. Economists forecast a steady 4% unemployment rate and 4.1% year-on-year average hourly earnings growth in February.
Softer-than-expected wage growth and higher unemployment could drive expectations for a June Fed rate cut, potentially dragging USD/JPY toward 147.5. Conversely, tighter labor market conditions and rising wages may sink bets on a June move, driving the USD/JPY pair toward 150, a key resistance level.
Beyond the jobs data, investors should closely monitor tariff developments and FOMC members’ views on inflation, employment, and the Fed’s rate path.
Explore in-depth USD/JPY trade setups and expert forecasts here.
China Trade Data and Its Impact on the Aussie Economy
On Friday, March 7, China’s trade data will be a key driver for the AUD/USD pair. Economists forecast China’s exports to rise 5% year-on-year in February after surging 10.7% in January.
A lower-than-expected reading could signal waning demand ahead of Trump’s Executive Order, which raised tariffs on China to 20% in March. Conversely, a higher export print may reinforce confidence in China’s economic outlook, supporting the Aussie economy and the Aussie dollar.
Since China accounts for one-third of Australia’s exports and trade contributes over 50% to Australia’s GDP, AUD/USD is highly sensitive to these figures.
- A strong trade report could push AUD/USD above the $0.63623 resistance level, targeting $0.64.
- A weak report may send AUD/USD toward the 50-day EMA and the crucial $0.63 support level.
For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.
Australian Dollar Daily Chart
Later in the US session, a stronger-than-expected US Jobs Report could curb June Fed rate cut bets. A more hawkish Fed stance could widen the US-Aussie interest rate differential, favoring the US dollar. Under this scenario, the AUD/USD pair may drop to the 50-day EMA and the $0.63 level.
Conversely, weaker labor market data could signal expectations for multiple Fed rate cuts. A more dovish Fed rate path may narrow the rate differential, potentially driving the AUD/USD pair toward $0.64 and the 200-day EMA.
Market Trends: Central Banks and Trade Policies in Focus
Key macroeconomic drivers influencing currency markets include:
- BoJ Forward Guidance: Intervention threats, inflation trends, and rate path expectations.
- US Economic Data and Tariff Policies: The US Jobs Report and tariff developments.
- AUD/USD Outlook: China’s trade data, Beijing’s stimulus measures, and US-China trade tensions will influence RBA policy expectations and Aussie dollar demand.
Read expert USD/JPY and AUD/USD forecasts here for deeper insights.
About the Author
Bob Masonauthor
With over 28 years of experience in the financial industry, Bob has worked with various global rating agencies and multinational banks. Currently he is covering currencies, commodities, alternative asset classes and global equities, focusing mostly on European and Asian markets.
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