The AUD/JPY currency pair declined on Monday, pressured by uncertainty surrounding US trade policies and a contraction in China's factory activity. Traders await Australian inflation data for further direction.
The AUD/JPY currency pair experienced a slight decline, trading around 98.10 in Monday's Asian session. This represents a 0.32% decrease compared to the previous day's close. The Japanese Yen (JPY) gained strength amidst increased demand for safe-haven assets. Traders are closely monitoring the Australian Consumer Price Index (CPI) inflation data for the fourth quarter, scheduled for release on Wednesday. This data could provide fresh direction for the AUD/JPY cross.
On Sunday, US President Donald Trump imposed retaliatory measures on Colombia, including tariffs and sanctions, after the South American nation refused to allow two military planes carrying deported migrants to land. However, on Monday, the White House clarified that Colombia had agreed to accept illegal migrants returned from the US. The uncertainty surrounding President Trump's trade and immigration policies may support the JPY, a traditional safe-haven currency, potentially hindering the AUD/JPY pair.Furthermore, China's factory activity unexpectedly contracted in January, reversing the growth observed in the previous three months. This development exerted some selling pressure on the Australian Dollar (AUD), as China's economic performance significantly impacts Australia's economy. Zichuan Huang, China economist at Capital Economics, commented that the disappointing PMI data highlights the challenges policymakers face in achieving a sustained recovery in growth. The focus will now shift to the Australian Q4 CPI data on Wednesday. If the data falls short of expectations, it could increase speculation about a February rate cut by the Reserve Bank of Australia (RBA) and further weaken the AUD
AUD/JPY Japanese Yen Australian Dollar Trade War China Economy Inflation
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