AUD Gains on Aussie Export Rebound, Soft Japan Data

Key Moments

Australian Dollar Regains Momentum on Trade Data

AUD/JPY halted its seven-session slide and was last trading near 109.80 during Asian dealings on Thursday, with the pair finding support from improved Australian trade figures. The Australian Dollar (AUD) remained resilient after the latest Trade Balance release, even though the overall surplus narrowed compared with the prior month.

Data from the Australian Bureau of Statistics showed that Australia’s Trade Surplus narrowed to A$495 million month-over-month in August, down from a revised A$1,351 million in July. The change was driven by a sharp rise in imports, which increased 5.8% MoM after falling 2.4% in July, while exports recovered by 3.7% MoM following a 3.6% drop in the previous month.

Japanese Sentiment Data and BoJ Outlook Pressure the Yen

On the Japanese side of the cross, the Bank of Japan’s (BoJ) third-quarter Tankan survey showed a modest improvement in business sentiment, but the results fell short of market projections. Japan’s Large Manufacturing Index rose from 22 to 24, missing the expected reading of 25. The Non-Manufacturing Index eased to 35, compared with a consensus estimate of 36.

Separately, the BoJ’s Summary of Opinions from its September policy meeting indicated that some policymakers see a need to quicken the pace of rate increases or bring policy closer to target in the near term. Most members supported additional tightening after September’s rate hike to 1.25%, described as a 31-year high.

Market Positioning and Intervention Fears Support the Yen

Strategists at Societe Generale highlighted that the Japanese Yen has been a notable performer in G10 foreign exchange trading this month. Kit Juckes observed that “the yen has been the strongest of the G10 currencies this month, and the market’s reluctance to be caught out by intervention is clearly having an impact.” He associated the currency’s strength with market caution around potential official measures in Japan, suggesting that expectations of further USD/JPY intervention are limiting renewed short Yen positions and promoting more defensive positioning in Yen crosses.

Australia’s Trade Balance Snapshot

The Trade Balance, published by the Australian Bureau of Statistics, measures the difference between the value of Australian exports and imports of goods. Export figures provide insight into external demand and growth prospects, while import levels reflect domestic demand conditions. The Trade Balance offers an early read on net export performance. Persistent demand for Australian exports is typically regarded as supportive for the AUD, as it can contribute to positive trade balance outcomes.