Japanese Yen and Australian Dollar News: Japan GDP, China Retail Sales Key for Trends

Japan GDP and the Bank of Japan in Focus

Japan’s Q3 GDP numbers, due on Friday, November 15, will likely influence USD/JPY trends and sentiment toward a Bank of Japan rate hike. Economists forecast Japan’s economy to expand by 0.2% quarter-on-quarter in Q3 2024, down from 0.8% in Q2 2024.

An unexpected contraction could temper investor bets on a December Bank of Japan rate hike. A less hawkish BoJ rate path may drive the USD/JPY pair toward 157. Conversely, stronger-than-expected economic growth could drag the pair toward 155 on speculation of a BoJ rate hike.

Beyond the headline GDP figure, Private consumption, which accounts for over 50% of GDP and is crucial for demand-driven inflation trends, requires consideration. Economists predict private consumption will increase by 0.2% quarter-on-quarter in Q3 2024, down from 0.9% in Q2 2024.

Following the BoJ’s October monetary policy decision, Governor Kazuo Ueda warned that the Bank would scrutinize income data for future policy decisions.

Expert Views on the Bank of Japan Rate Path

On Thursday, November 14, 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.”

On Thursday, the USD/JPY climbed to a session high of 156.239, adding further pressure on the BoJ to hike rates to restore price stability. A weaker Japanese Yen pushes import costs higher, impacting household expenses, which remains a persistent concern for the BoJ and the Japanese government.

Japanese Yen Daily Chart

Turning to the US dollar, retail sales figures could further influence sentiment toward the Fed rate path after October’s inflation reports. Economists expect a 0.3% increase in retail sales for October, down slightly from 0.4% in September.

A larger-than-expected rise could fuel inflation concerns, potentially driving the USD/JPY toward 157 on falling Fed rate cut bets. Conversely, an unexpected drop in retail sales could pull the USD/JPY toward 155.

Other data includes industrial production and NY Empire State Manufacturing Index numbers. However, retail sales will likely be the primary driver for US dollar demand and the Fed rate path.

AUD/USD, the PBoC, and China’s Key Economic Indicators

On Friday, the People’s Bank of China and economic data from China will likely influence buyer appetite for the AUD/USD. Economists expect the PBoC to maintain the 1-year Medium Term Lending Facility (MLF) Rate at 2.0%. However, absent an unexpected rate cut, markets will likely focus on crucial economic indicators to gauge the effects of recent stimulus efforts.

Economists predict a modest pickup in retail sales and industrial production, potentially suggesting that the stimulus measures have bolstered China’s economy.

An improving economy could signal a pickup in demand, potentially supporting the Aussie economy. China accounts for one-third of Aussie exports, with Australia’s trade-to-GDP ratio above 50%.

Better-than-expected numbers could drive the AUD/USD toward $0.65. However, weaker-than-expected figures might pull it to $0.64.

Expert Views on China’s Stimulus Measures and Demand

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero remarked on October’s credit data from China, stating,

“Record low growth of total social financing (all types of financing included) at 7.8%. This means that the PBoC’s turn towards laxer monetary conditions on September 24 is not reviving the demand for credit.”

Herrero’s comments echo broader market disappointment about the lack of stimulus targeting consumer consumption.

Australian Dollar Daily Chart

Meanwhile, in the US session, retail sales could further impact the AUD/USD pair after October’s inflation figures.

A larger-than-expected increase in retail sales could drag the AUD/USD toward $0.64 on higher Fed rate hold bets. The $0.64 mark was a crucial support level in April 2024. However, an unexpected fall in retail sales may boost bets on a December Fed rate cut, potentially driving AUD/USD up to $0.65.

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