AUD/JPY Slips as Australia Trade Data Softens

Key Moments

AUD/JPY traded near 113.50 in Asian hours on Thursday, extending its decline for a fourth straight session.
Australia’s July trade surplus narrowed to A$1,923M as exports fell 3.3% month-over-month, reversing the prior month’s 9.1% surge.
Japan’s Jibun Bank Composite PMI rose to 53.5, marking the highest reading since February and a 17-month run of private-sector expansion.

Australian Dollar Under Pressure as Trade Surplus Shrinks

AUD/JPY continued to lose ground for a fourth consecutive day, changing hands around 113.50 during Thursday’s Asian session. The Australian Dollar (AUD) stayed under pressure after a batch of mixed data from both Australia and China weighed on sentiment toward the currency pair.

Australia’s trade balance narrowed sharply in July, with the surplus slipping to A$1,923M month-over-month from a revised A$2,341M previously. Despite the deterioration, the outcome still exceeded market expectations of A$1,390M. The weaker surplus was driven by a 3.3% month-over-month drop in exports, which followed a strong 9.1% gain in the prior month, alongside a 2.5% decline in imports.

On the positive side for regional demand, China’s RatingDog Services Purchasing Managers’ Index (PMI) showed clear improvement. The index rose to 51.4 in August from 50.4 in July, coming in comfortably above the projected 50.6 and signaling an expansion in services activity.

Japanese PMIs Signal Firm Momentum in Services and Broader Economy

Japanese survey data pointed to a steady improvement in business conditions. The Jibun Bank Services PMI increased to 52.5 in August from 51.2 in July, also topping the flash estimate of 52.3. This was described as the strongest pace of growth since March, supported by a quicker recovery in new orders after they had fallen to a 25-month low in July.

The broader Jibun Bank Composite PMI advanced to 53.5 in August 2026, above both the 53.4 flash reading and July’s 52.7 print. This was the highest level since February and extended the private sector’s expansion streak to 17 consecutive months, underscoring resilient underlying momentum in Japan’s economy.

Indicator	Region	Period	Latest Value	Previous	Consensus
Trade Balance	Australia	July	A$1,923M	A$2,341M (revised)	A$1,390M
Exports (m/m)	Australia	July	-3.3%	+9.1%	n/a
Imports (m/m)	Australia	July	-2.5%	n/a	n/a
RatingDog Services PMI	China	August	51.4	50.4	50.6
Jibun Bank Services PMI	Japan	August	52.5	51.2	Flash: 52.3
Jibun Bank Composite PMI	Japan	August 2026	53.5	52.7	Flash: 53.4

BNY Mellon Sees Limited Potential for Durable Yen Strength

Despite the solid run of Japanese data, strategists at BNY Mellon remain cautious on the prospect of a significantly stronger Yen. They wrote that they are “deeply skeptical of the Japanese authorities’ ability to boost JPY.”

They referenced remarks from U.S. Treasury Secretary Scott Bessent, who commented on Tuesday that “Abenomics was reflationary, Japan can sit back and enjoy.” According to BNY, this observation illustrates that in “low-growth, low-yield economies, a reflation period can make currency performance far more tolerable,” reinforcing their view that Japan’s current reflation-oriented policy framework may relieve pressure on the Yen rather than produce a sustained appreciation.

Understanding the RatingDog Services PMI

The RatingDog Services Purchasing Managers Index (PMI) is published monthly by Caixin Insight Group and S&P Global and serves as a forward-looking gauge of conditions in China’s services sector. It is based on survey responses from senior executives at private and state-owned firms, who report whether activity has improved, deteriorated, or remained unchanged compared with the prior month.

Movements in the index can foreshadow shifts in broader indicators such as Gross Domestic Product (GDP), industrial production, employment, and inflation. The PMI ranges from 0 to 100, with 50.0 indicating no change from the previous month. Readings above 50 point to expanding activity in services, which is generally considered positive for the Renminbi (CNY), while readings below 50 signal contraction and are typically viewed as negative for CNY.