The AUD/JPY pair remains stable for a second consecutive day, hovering around the 100.00 level during the European session following the release of mixed Q3 Producer Price Index (PPI) data on Friday. Despite this subdued performance, expectations for a hawkish stance from the Reserve Bank of Australia (RBA) are providing some support to the Australian Dollar, helping to mitigate losses in the AUD/JPY cross.
Australia’s PPI increased by 0.9% quarter-on-quarter in Q3, slightly up from a 1.0% rise in the previous quarter and exceeding forecasts of a 0.7% gain. This marks the 17th consecutive period of producer inflation. However, on an annual basis, PPI growth decelerated to 3.9% in Q3, down from 4.8% in the prior quarter.
In contrast, China’s Caixin Manufacturing Purchasing Managers Index (PMI) improved to 50.3 in October, up from 49.3 in September and surpassing market expectations of 49.7. As China is a significant trading partner for Australia, any economic shifts in the region could have a considerable impact on Australian markets.
On the Japanese side, the Jibun Bank Japan Manufacturing PMI was reported at 49.2 in October, reflecting a decline from 49.7 in September. This indicator suggests that Japanese manufacturing production continues to contract at the start of the fourth quarter of 2024, with both output and new order inflows decreasing at a more pronounced rate.
The Japanese Yen (JPY) had strengthened on Thursday following comments from Bank of Japan (BoJ) Governor Kazuo Ueda, which were interpreted as increasing the likelihood of a rate hike in December. The central bank aims to adjust policy rates as long as economic conditions and inflation are in line with its forecasts, focusing on sustainably achieving its 2% inflation target.
Additionally, Japan’s Chief Cabinet Secretary Yoshimasa Hayashi remarked on Friday that he anticipates the Bank of Japan will collaborate closely with the government to implement effective monetary policy, aiming for stable and sustainable achievement of its price objectives.
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