AUD/JPY Extends Advance as China Data Backs Bulls

Key Moments

China Data Lifts AUD Against JPY

The AUD/JPY cross is trading higher around 114.60 in early European hours on Tuesday, with the Australian Dollar supported by stronger Chinese economic figures against the Japanese Yen.

According to data released by RatingDog on Tuesday, China’s Manufacturing Purchasing Managers’ Index (PMI) climbed to 51.5 in August, up from 50.9 in July. The August reading exceeded the market expectation of 50.9.

BoJ Expectations and Market Pricing for the Yen

On the Japanese side, market pricing currently reflects nearly a 73% likelihood of a Bank of Japan (BoJ) rate increase later this month, although some analysts argue that a more forceful follow-through from the central bank will be needed.

“For the yen, a September BOJ hike is already heavily anticipated,” said Charu Chanana, chief investment strategist at Saxo.

Analysts See Limits to Further BoJ Hawkishness

Strategists at OCBC FX, Sim Moh Siong and Christopher Wong, observe that the Japanese Yen has already benefited substantially from what they describe as “aggressive market pricing for Bank of Japan (BoJ) tightening,” with an implied “85% chance of a September hike.” They note that “a September move would break from the BoJ’s pattern in the current tightening cycle, where rate increases have typically come about every six months,” highlighting that “the last hike was delivered in June.”

However, they warn that “it will be difficult for the BoJ to out-hawk market expectations,” and suggest that additional appreciation in JPY may increasingly rely on policy steps beyond rate adjustments. These could include efforts to encourage the repatriation of overseas assets, as they argue the BoJ faces constraints on both the scale and speed of any further rate increases.

Technical Overview: AUD/JPY

The daily chart continues to show a constructive near-term outlook for AUD/JPY, with the pair trading firmly above the 100-day moving average (MA) and the 20-period simple moving average of the Bollinger Bands. This configuration indicates ongoing demand following the recent move higher.

The 14-period Relative Strength Index (RSI) stands at 63.92, indicating bullish momentum without yet pointing to extreme overbought conditions. This suggests that buying pressure could remain in place as long as key supports hold.

On the upside, the first resistance is located at the August 28 peak of 114.96. Beyond that, the next key area is around the upper Bollinger Band near 115.30, where buying demand could begin to ease, potentially prompting a period of consolidation.

On the downside, an important support band sits in the 113.25-113.20 region, forming a relatively tight demand area. Below this, focus shifts to the August 20 low at 112.52. A more pronounced correction would bring the lower Bollinger Band, currently around 111.05, into view.