- AUD/JPY ticks higher following a strong labor report from Australia released on Thursday.
- Australia’s Employment Change increased by 64.1K, significantly surpassing the expected rise of 25.0K.
- Meanwhile, the Japanese Yen weakened as Japan's Trade Balance showed a larger-than-expected deficit of JPY 294.3 billion in September.
AUD/JPY is gaining momentum after two consecutive days of losses, trading near the key psychological level of 100.00 during Thursday's European session. This upward movement is primarily driven by a strengthening Australian Dollar (AUD), following a robust employment report from Australia.
In September, seasonally adjusted Employment Change surged by 64.1K, bringing total employment to a record 14.52 million and significantly exceeding market expectations of a 25.0K increase. This follows a revised increase of 42.6K in August.
Additionally, Australia's Unemployment Rate remained steady at 4.1% in September, matching the revised figure for August and beating forecasts of 4.2%. The number of unemployed individuals decreased by 9.2K, bringing the total to 615,700.
On the other hand, the Japanese Yen (JPY) is facing additional downward pressure due to weaker-than-expected Trade Balance data released on Thursday. Japan's Trade Balance reported a deficit of JPY 294.3 billion in September, compared to a larger deficit of JPY 703.2 billion in August. This marks the third consecutive month of a trade gap and was worse than market expectations of a JPY 237.6 billion shortfall.
Japan's exports fell by 1.7% year-over-year in September, reversing the marginally revised 5.5% growth in August and missing forecasts for a 0.5% increase. This represents the first drop in exports since November 2023. Meanwhile, imports rose by 2.1% year-over-year, following a 2.3% increase in August, but fell short of the expected 3.2% growth. Although this marks the sixth consecutive month of rising imports, it reflects the slowest growth in that sequence.
This disappointing trade balance report complicates the Bank of Japan's (BoJ) plans to exit its ultra-easy monetary policy, adding further downward pressure on the Japanese Yen (JPY). Earlier in the week, BoJ board member Seiji Adachi cautioned against making drastic changes to policy, citing uncertainties in the global economic outlook and concerns over domestic wage growth.
