Japanese Yen and Australian Dollar News: BoJ Governor Ueda Set to Impact USD/JPY

Japan Machinery Order and Bank of Japan Governor Ueda in Focus

On Monday, November 18, machinery orders will influence USD/JPY trends and sentiment toward demand. Economists forecast machinery orders to rise 2.2% year-on-year in September, rebounding from a 3.4% decline in August. Stronger-than-expected orders could suggest improving demand.

An improving demand environment may spur job creation, boosting wage growth and consumer spending. Private consumption is a focal point for the BoJ as it contributes over 60% of Japan’s GDP and fuels demand-driven inflation.

Positive machinery order figures may fuel speculation about a December BoJ rate hike, potentially dragging the USD/JPY toward 153. Conversely, an unexpected fall in orders could drive the USD/JPY toward 156.

While machinery orders will influence demand for the Japanese Yen, BoJ Governor Kazuo Ueda will likely have a greater impact on the Yen. The BoJ Governor is scheduled to speak later in the morning session. His views on the economic outlook, inflation, and the BoJ rate path will impact USD/JPY trends.

Support for a December BoJ rate hike could send the USD/JPY pair toward 153. Notably, the USD/JPY climbed to a high of 156.744 on Friday, potentially pressuring the BoJ into a policy move.

Expert Views on the Bank of Japan Rate Path

Last week, Takeshi Shina, shadow finance minister of the Constitutional Democratic Party of Japan, reportedly called for the BoJ to raise interest rates to at least 1%, arguing that abnormally excessive stimulus has contributed to unwelcome Yen depreciation, stating,

“The BoJ’s mandate is to achieve price stability but that isn’t being met, as the huge U.S.-Japan interest rate gap is causing yen falls that push up the cost of living.”

Japanese Yen Daily Chart

Turning to the US session, US housing sector data will require consideration as economists considered the sector a litmus test for the US economy. A higher-than-expected NAHB Housing Market Index may push the USD/JPY toward 156. Conversely, an unexpected fall may pull the USD/JPY toward 153.5, a crucial support level.

Beyond the numbers, FOMC member commentary could also move the dial following Fed Chair Powell’s hawkish remarks. FOMC member Austan Goolsbee is on the calendar to speak. Insights into the timing of a Fed rate cut may impact US dollar demand.

Shifting Focus to AUD/USD and RBA Forward Guidance

Turning to the AUD/USD, the pair faces a pivotal week. RBA commentary will influence trends on Monday. RBA Assistant Governor Christopher Kent’s views on the labor market, inflation, and China could impact Aussie dollar demand.

Recent weak Australian labor data and concerns over US-China tariffs have weighed on the Aussie, which briefly fell below $0.6450 last week.

RBA Governor Michele Bullock recently highlighted the uncertainty surrounding US tariffs, stating,

“It’s not easy to dissect what’s going to happen with all of this. It might be inflationary in some ways. But it might be deflationary in the other ways — if China ends up badly affected by this, that badly affects us.”

With Australia’s trade-to-GDP ratio above 50% and 20% of its workforce in trade-related jobs, a US tariff-hit China could adversely affect the Aussie economy, labor market, and the Aussie dollar.

Dovish RBA commentary, supporting a December RBA rate cut, could drag the AUD/USD toward $0.64. Conversely, support for the status quo would leave the pair vulnerable to US tariff developments.

Australian Dollar Daily Chart

Shifting focus to the US session, economists forecast the NAHB Housing Market Index to rise slightly from 43 in October to 44 in November. An improving US housing market could boost consumer confidence and spending, potentially delaying a Fed rate cut.

A less dovish Fed rate path may pull the AUD/USD down to $0.64. On the other hand, an unexpected decline may fuel Fed rate cut bets, pushing the pair toward $0.65.

FOMC member Austan Goolsbee’s remarks will also warrant attention following Fed Chair Powell’s cautious stance. Support for maintaining interest rates at 4.75% may boost US dollar demand. This could further weigh on AUD/USD.

Traders should closely monitor central bank statements and economic releases for real-time guidance.