Japanese Yen and Aussie Dollar Forecasts: Eyes on Spending, Turnover, and the Fed

Household Spending Data May Fuel BoJ Rate Hike Speculation

Crucial Japanese household spending figures could fuel speculation about a Q4 Bank of Japan rate hike and influence the USD/JPY pair.

Economists expect household spending to slide 3% month-on-month (MoM) in June after surging 4.6% in May. A sharp drop in consumer spending may temper finely balanced bets on a fourth-quarter BoJ policy move. Weaker spending could dampen demand-driven inflation. Furthermore, the drop in spending may slow economic momentum, given that private consumption accounts for over 50% of Japan’s GDP.

Nevertheless, rising wages may offset some of the downside in spending, potentially supporting consumption in the third quarter. Average cash earnings rose 2.5% year-on-year (YoY) in June, accelerating from a 1.4% increase in May. Higher wages could boost household disposable incomes and consumer spending.

East Asia Econ remarked on the wage growth figures, stating:

“The shunto has boosted full-time regular wages, which increased more quickly in May and June than last year. Part-time hourly wage growth has also picked up again, and will get a further boost from the recently announced hike in minimum wage. But for now, real overall wages are still falling.”

Commenting on the recent minimum wage hike, East Asia Econ stated:

“Interesting that the recommended 6% rise in Japan’s min wage isn’t attracting more attention. Last year’s rise was already significant enough to be a specific issue of discussion for the BOJ.”

Beyond the data, trade developments and the BoJ’s Summary of Opinions will also influence sentiment toward the BoJ’s monetary policy stance. This week, President Trump raised US tariffs on Japan to 30%, reviving concerns about demand for Japanese goods and the broader economy. Comments on tariffs could prove crucial in light of the latest tariff hike.

USD/JPY Daily Outlook: Fed Rhetoric in Focus

Later in the session on Friday, Fed commentary might influence risk expectations of a September interest rate hike. Increasing calls for policy easing in September may raise bets on further rate cuts in Q4, weakening US dollar demand.

A more dovish Fed policy stance could push USD/JPY toward the 50-day EMA. A drop below the 50-day EMA may expose the crucial 145 support level.

Conversely, calls to delay rate cuts to assess the effect of recent tariffs on US inflation could lift the appetite for the US dollar, sending the USD/JPY pair toward the 200-day EMA.

USD/JPY: Key Scenarios to Watch

• Bearish USD/JPY Scenario: Strong household spending data, hawkish BoJ rhetoric, or dovish Fed signals. Such factors could send USD/JPY toward the 50-day EMA, potentially testing the 145 support level.
• Bullish USD/JPY Scenario: Weaker-than-expected household spending, dovish BoJ rhetoric, or hawkish Fed guidance. These may drive the pair toward the 200-day EMA and potentially the 149.358 resistance level.

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

AUD/USD: Monthly Business Turnover in Focus

Turning to the AUD/USD pair, the ABS will release monthly business turnover data in the morning session. In June, the monthly business turnover indicator showed declines across five sectors, contributing to a 0.1% fall in the 13-industry aggregate.

A further decline in the business turnover indicator could signal weakening demand, supporting a more dovish RBA rate path. However, investors should consider key sector trends, including accommodation and food services and retail trade. These trends could be crucial for the RBA, given that weakening demand in accommodation and retail trade may materially soften underlying inflation.

Notably, a softening in turnover may also dampen wage growth and labor market conditions.

On the other hand, a positive indicator reading may ease expectations of Q4 RBA rate cuts, boosting demand for the Aussie dollar.

AUD/USD: Key Scenarios to Watch

• Bearish AUD/USD Scenario: Weak Aussie data or dovish RBA signals. These factors could drag AUD/USD toward the 50-day EMA, potentially exposing the 200-day EMA.
• Bullish AUD/USD Scenario: Positive Aussie data or hawkish RBA rhetoric. These factors could drive AUD/USD toward the crucial $0.6550 resistance level.

Explore our full AUD/USD analysis, including key trends and trade data, here.

AUD/USD Daily Outlook: The Fed Signals and Rate Differentials

Later today, Fed guidance could influence bets on multiple Fed rate cuts and US-Australian interest rate differentials.

Hawkish Fed policy chatter, calling for a delay to rate cuts, would widen the rate differential in favor of the US dollar, pushing AUD/USD toward the 50-day EMA. A drop below the 50-day EMA may expose the 200-day EMA.

Conversely, support for a 50-basis point Fed rate cut in September would narrow the rate differential. A narrower rate differential could send AUD/USD toward the $0.6550 resistance level. A sustained move above the $0.6550 level may enable the bulls to target the July high of $0.6625.

Key Market Drivers to Watch Today:

• USD/JPY: Japan household spending, US-Japan trade headlines, and BoJ commentary.
• USD/JPY and AUD/USD: Fed guidance.
• AUD/USD: Aussie data and RBA monetary policy cues.

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