Japanese Yen and Australian Dollar News: Interventions and Aussie Unemployment

Intervention Risks Resurface for the Bank of Japan

On Wednesday, November 13, the USD/JPY extended its winning streak to three sessions. USD/JPY returned to 155, a level last seen just before the BoJ’s July rate hike. Markets may consider current levels a potential intervention zone, threatening USD/JPY trends.

However, past government interventions struggled to cap the USD/JPY upside, which struck a 2024 high of 161.951 on July 3. While interventions are on the table, further USD/JPY upside from 155 could force the Bank of Japan into a December rate hike.

As the Yen-funded carry trade has revived, the Japanese government and the BoJ will be wary to avoid the market disruption that followed the policy decision on July 31.

Investors should monitor for intervention threats and hawkish BoJ commentary. Absent an intervention, BoJ support for a December BoJ rate hike could pull the USD/JPY below 154. Conversely, government and BoJ silence may push the pair through 156.

Expert Views on the USD/JPY and Interventions

Rabobank Head of FX Strategy Jane Foley spoke to Bloomberg TV on Wednesday, warning that the BoJ is the one to watch following the USD/JPY move through 155.

The USD/JPY has appreciated sharply since October’s BoJ interest rate decision and Trump’s recent election victory. Market expectations of inflationary policies under Trump, potentially reducing the number of Fed rate cuts, have fueled speculation about possible BoJ rate hikes.

Japanese Yen Daily Chart

Turning to the US dollar, producer prices will play a key role in the US session after Wednesday’s US CPI Report. Economists expect producer prices to increase by 2.3% year-on-year in October, up from 1.8% in September. Higher producer prices could signal a pickup in inflationary pressures, potentially delaying a Fed rate cut.

The USD/JPY could move toward 156 on falling expectations for a December Fed rate cut. Conversely, softer-than-expected numbers may raise bets on a Fed rate cut, potentially dragging the pair toward 154.

Other data includes the weekly jobless claims. However, unless there is an unexpected spike in claims, producer prices will likely influence US dollar demand more.

AUD/USD, the Labor Market, and the RBA Rate Path

Aussie labor market data will spotlight the AUD/USD on Thursday, November 14. Economists expect the unemployment rate will remain at 4.1% in October, with full and part-time employment projected to increase.

Better-than-forecast labor market data could dampen bets on a December RBA rate cut. Tight labor market conditions may support wage growth, fueling consumer spending and demand-driven inflation. The AUD/USD could respond with a move toward $0.65500. Conversely, an unexpected rise in unemployment may pull the pair below $0.64500.

Expert Views on the Aussie Labor Market

Shane Oliver, AMP Head of Investment Strategy and Chief Economist, commented on Wednesday’s Aussie wage growth report, stating,

“Our Wages Growth Leading Indicator points to a further slowing in wages growth reflecting slowing job vacancies and hiring plans.”

Responding to November’s RBA policy decision, Oliver discussed a potential December RBA rate cut if unemployment climbed higher.

Australian Dollar Daily Chart

In the US session, US producer prices could be crucial for the AUD/USD pair after Wednesday’s US CPI Report.

Higher-than-expected producer prices may signal a pickup in consumer prices. Rising inflation may temper bets on a December Fed rate cut, dragging the AUD/USD toward $0.64. Conversely, softer-than-expected producer prices may refuel bets on a Fed rate cut, supporting an AUD/USD move toward $0.65500.

Traders should stay alert for real-time updates on central bank commentary and data releases.