Japanese Yen and Aussie Dollar Forecasts: Aussie Inflation and China PMIs in Focus

Japan Retail Sales in Focus as BoJ Policy Meeting Begins

Economic data from Japan put the USD/JPY pair center stage on Wednesday, April 30, as the Bank of Japan kicked off its two-day monetary policy meeting. Two crucial economic indicators, retail sales, and industrial production, could give insights into the early effects of US tariffs on Japan’s economy and inflation outlook.

Retail sales rose 3.1% year-on-year in March, up from 1.4% in February. The surge in consumer spending reflected the effects of higher wages on private consumption. Significantly, higher retail sales may fuel demand-driven inflation and bolster the economy, supporting a more hawkish BoJ stance.

Meanwhile, industrial production fell 1.1% month-on-month in March after soaring 2.3% in February. The pullback may reflect the initial effects of US tariffs on manufacturing and exports.

Following the data releases, the USD/JPY dropped from 142.325 to 142.266. The retail sales figure had a more pronounced effect on Yen demand, given its broader implications for inflation and monetary policy.

Beyond the data, trade developments remain crucial for USD/JPY trends. US progress toward trade deals with its key trading partners may ease safe-haven flows into the Yen. However, stalled negotiations or escalating trade tensions could drive Yen appetite.

USD/JPY: Key Scenarios to Watch

• Bullish Yen Scenario: Increasing trade tensions, stalled US-Japan trade talks, positive Japanese data, or hawkish BoJ guidance may push USD/JPY lower toward the 140.309 support.
• Bearish Yen Scenario: A de-escalation in the trade war, a US-Japan trade deal, weak data, or a dovish BoJ stance could drive the pair toward 145.

USD/JPY Daily Outlook: US Labor Market and Inflation in Focus

Later in today’s US session, key data releases could dictate the Fed’s policy stance. Economists forecast April ADP employment to increase 108k, down from 155k in March. A softer reading may raise expectations for a June Fed rate cut. Conversely, a higher print could signal a hawkish Fed stance.

Economists forecast the Core PCE Price Index to rise 2.6% year-on-year in April, easing from 2.8% in March. Softer inflation would likely overshadow labor market data, supporting a more dovish Fed rate path. In this scenario, the USD/JPY could fall toward the 140.309 support level. On the other hand, a higher inflation reading may ease Fed rate cut bets, driving the pair toward 145.

Other US stats include Q1 2025 GDP and personal income/spending data. However, unless surprises are significant, labor and inflation data will be the key drivers.

Explore expert USD/JPY forecasts and setups in our latest analysis.

AUD/USD Forecast: Aussie Inflation Spotlights the RBA

The AUD/USD faces a pivotal session on April 30 as investors await Q1 Aussie inflation data. Economists forecast the RBA trimmed mean CPI to soften from 3.2% in Q4 2024 to 2.9% in Q1 2025, falling within the RBA’s 2-3% inflation target range.

A lower-than-expected inflation reading may raise bets on a May RBA rate cut and dovish outlook, weighing on the Aussie dollar. In contrast, a higher trimmed mean CPI could dampen expectations of a May rate cut, potentially sending the Aussie dollar higher.

In addition to inflation, investors should consider trade headlines and China’s private sector PMI data. China, which accounts for around one-third of Australia’s exports, plays a vital role in AUD trends. A slowdown in Chinese demand or renewed US-China tensions could reinforce dovish RBA sentiment. Positive Chinese data and easing trade tensions may boost Aussie demand.

AUD/USD: Key Scenarios to Watch

• Bearish Aussie dollar Scenario: Escalating US-China trade tensions, softer Aussie inflation, weak China PMIs, or dovish RBA commentary may push AUD/USD below the $0.63623 support level.
• Bullish Aussie dollar Scenario: Trade de-escalation, higher inflation, upbeat China PMIs, or a hawkish RBA stance could drive the pair above the 200-day EMA toward $0.65.

Click here for a more comprehensive analysis of AUD/USD trends and trade data insights.

Aussie Dollar Daily Outlook: Will US Data Widen the Rate Differential?

In the US session, upbeat labor market data and higher inflation may sink Fed rate cut bets. A more hawkish Fed policy outlook could widen the US-Aussie rate differential in the US dollar’s favor, potentially dragging AUD/USD below $0.63623.

Conversely, softer US inflation could fuel Fed rate cut expectations, sending AUD/USD toward $0.65.

Key Market Drivers to Watch Today:

• USD/JPY: Japan trade headlines, Japan’s economic data, and BoJ policy sentiment.
• USD/JPY and AUD/USD: US labor market and inflation data, and broader trade developments.
• AUD/USD: Aussie inflation, China PMIs, RBA commentary, and Beijing’s stimulus.

For more in-depth analysis, review today’s USD/JPY and AUD/USD trading setups in our latest reports.