The AUD/JPY pair edged lower during Wednesday’s Asian trading session, retreating from a one-week high near 91.40 reached the previous day. Despite a raft of stronger-than-expected Chinese economic data, the cross remains under pressure below the mid-91.00s, weighed down by heightened US-China trade tensions and a firm Japanese Yen.
China’s Strong Data Fails to Lift Aussie
China’s National Bureau of Statistics reported a better-than-expected annual GDP growth of 5.4% in the first quarter of 2025, surpassing forecasts of 5.1%. Retail sales and industrial production in March also exceeded estimates, with retail sales surging 5.9% year-over-year and industrial output climbing 7.7%. Fixed asset investment grew by 4.2%, slightly above expectations.
However, quarterly GDP growth slowed to 1.2%, missing forecasts of 1.4% and suggesting that domestic momentum may be fading. More significantly, the broader risk tone remains subdued amid the rapidly escalating US-China trade war, dampening investor enthusiasm for China-linked assets such as the Australian Dollar.
Safe-Haven Flows Favor Yen; BoJ Tightening Bets Grow
In contrast, the Japanese Yen continues to draw support from safe-haven demand and rising expectations that the Bank of Japan (BoJ) could raise interest rates further. Governor Kazuo Ueda recently hinted that policy action may be necessary if external risks, particularly U.S. tariffs, threaten Japan’s economic stability—reinforcing market speculation of further tightening ahead.
RBA Minutes Signal Caution; Australia Jobs Data in Focus
Meanwhile, minutes from the Reserve Bank of Australia’s (RBA) latest meeting suggested a cautious stance on further rate cuts, citing ongoing global uncertainties. While this has helped temper AUD selling, traders remain wary ahead of Australia’s key employment report due Thursday, which could provide fresh direction for the pair.
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