The AUD/JPY cross tumbles to near 103.15 during the early European session on Monday. The Australian Dollar (AUD) weakens against the Japanese Yen (JPY) as China’s economic slowdown deepened in November, with Retail Sales and industrial output growth falling short of expectations. All eyes will be on the Bank of Japan (BoJ) interest rate decision on Friday. The Japanese central bank is widely expected to announce an interest rate hike to 0.75% at its December monetary policy meeting.
China’s Retail Sales rose 1.3% year-over-year (YoY) in November, compared to 2.9% in October, according to the National Bureau of Statistics (NBS) on Monday. This reading came in worse than the estimations of 2.9%. Chinese Industrial Production increased 4.8% YoY in November versus 4.9% prior, below the market consensus of 5.0%. Softer Chinese consumption and factory activity could undermine the China-proxy Aussie, as China is Australia’s largest trading partner.
Technical Analysis:
In the daily chart, AUD/JPY trades at 103.15. The pair holds well above the rising 100-day EMA at 99.38, keeping the medium-term bias bullish. The EMA’s steady ascent underscores persistent demand. Price sits above the Bollinger midline at 102.42 and below the upper band at 104.42, signaling ongoing bullish pressure without overextension. RSI at 60.04 remains above the neutral 50 mark after easing from recent highs, indicating momentum is cooling but still positive.
Upside continuation would need a decisive move through the Bollinger upper band at 104.42 to extend the advance. On pullbacks, initial support aligns with the Bollinger midline at 102.42, while the 100-day EMA at 99.38 would serve as a deeper floor. Bollinger Bands slope higher, keeping the directional bias to the upside. RSI holding near 60 would favor dips being bought; a slide toward 50 could pivot price back toward the midline.
(The technical analysis of this story was written with the help of an AI tool)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Source: https://www.fxstreet.com/news/aud-jpy-price-forecast-bullish-outlook-remains-intact-near-10300-despite-weak-china-data-202512150556
