Japanese Yen and Aussie Dollar Forecasts: China Stats and Trade Headlines in Focus

Tertiary Industry Index: Impact on BoJ Policy and USD/JPY

Japan’s services sector will face scrutiny on Monday, May 19, influencing BoJ rate hike bets and USD/JPY trends. Economists forecast the Tertiary Industry Index to drop 0.2% month-on-month in March after holding steady in February.

A sharper fall could signal deteriorating service sector conditions at the end of the first quarter. A potential downward revision to the first estimate Q1 GDP figures could dampen expectations for a Q3 BoJ rate hike. However, improving sector conditions may support a more hawkish BoJ policy stance.

For context, the tertiary sector contributes roughly 70% to Japan’s GDP, underscoring its economic significance. Key tertiary sectors include financial services, hospitality, retail, and tourism.

USD/JPY Daily Outlook: Fed Speakers in Focus

Later in Monday’s session, Fed speakers will influence sentiment toward the Fed rate path and US dollar appetite. The Fed’s Bostic, Williams, and Jefferson are on the calendar to speak.

Traders should consider views on inflation, the labor market, and tariffs. Rising support for a Q3 Fed rate cut would weaken US dollar demand, sending USD/JPY toward the May 6 low of 142.350. However, calls to delay Fed rate cuts on labor market resilience and tariff uncertainties could drive USD/JPY above the 50-day EMA toward the 149.358 resistance level.

Beyond the Fed, traders should closely monitor trade headlines, which may also influence USD/JPY.

USD/JPY: Key Scenarios to Watch

• Bearish USD/JPY Scenario: Escalating trade tensions, stronger Japan data, or dovish Fed chatter may drag USD/JPY below 142.5.
• Bullish USD/JPY Scenario: Easing trade tensions, weak Japan data, or hawkish Fed rhetoric may support a move above the 50-day EMA toward 149.358.

See today’s full USD/JPY forecast with chart setups and trade ideas.

AUD/USD in Focus: China’s Economy in Focus

On May 19, China’s economic data will dictate AUD/USD trends amid ongoing US-China trade developments. Key stats, including retail sales, unemployment, and industrial production, could reflect the effects of US tariffs on manufacturing, the labor market, and domestic consumption.

Weaker-than-expected data could signal weakened demand, impacting Aussie trade terms as China accounts for one-third of Australian exports. Given that Australia has a trade-to-GDP ratio above 50%, deteriorating trade terms could fuel bets on multiple RBA rate cuts, pressuring AUD/USD. Conversely, upbeat data may signal a less dovish RBA stance, boosting Aussie dollar demand.

Beyond the data, US-China trade headlines also require consideration. An escalation in the US-China trade war may weigh on AUD/USD, while progress toward a trade deal could drive the pair higher.

AUD/USD: Key Scenarios to Watch

• Bearish Aussie dollar Scenario: Escalating US-China tensions, weak China data, or dovish RBA rhetoric may send AUD/USD toward the $0.63623 support level and the 50-day EMA.
• Bullish Aussie dollar Scenario: Easing US-China trade tensions, upbeat China data, Beijing stimulus, or hawkish RBA signals could drive the pair above the 200-day EMA toward the May 14 high of $0.65008.

Following last week’s labor market data, markets are pricing in three RBA rate cuts. Shane Oliver, AMP’s Head of Investment Strategy and Chief Economist, reacted to the jobs report, stating:

“The Australian money market post the jobs data has priced in a 96% probability of a 0.25% RBA rate cut on Tuesday with three 0.25% rate cuts priced in by year end.”

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

Aussie Dollar Daily Outlook: Fed Signals and Rate Differentials

Later today, hawkish Fed signals could widen the US-Aussie interest rate differential in favor of the US dollar.A less dovish Fed stance may send AUD/USD toward the $0.63623 support level and the 50-day EMA.

On the other hand, support for a Q3 2025 Fed rate cut may narrow the rate differential. A more dovish Fed could drive AUD/USD above the 200-day EMA toward $0.65144.

Key Market Drivers to Watch Today:

• USD/JPY: US-Japan trade talks, services sector data, and BoJ commentary.
• USD/JPY and AUD/USD: Fed forward guidance and global trade headlines.
• AUD/USD: US-China trade developments, China data, RBA signals, and Beijing stimulus-related news.

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