Japanese Yen and Aussie Dollar Forecasts: Services PMI and GDP Data Set Tone

Japan Services PMI and the Bank of Japan in Focus

Japan’s services sector PMI and USD/JPY will be under the spotlight amid speculation about a Bank of Japan rate hike in Q4. On Wednesday, September 3, finalized services sector PMI data requires consideration. According to the preliminary survey, the S&P Global Services PMI fell from 53.6 in July to 52.7 in August.

An upward revision could raise expectations of an October BoJ rate hike, lifting appetite for the yen.

However, traders should also consider input price (wages), selling price, and employment trends. Higher wages and an upswing in job creation could fuel consumer spending and demand-driven inflation. Upward trends in selling prices would also drive inflation higher, supporting a more hawkish BoJ policy stance.

On the other hand, a lower PMI reading and softer prices and job creation rates may temper expectations of an October BoJ rate hike. A less hawkish BoJ rate path could weigh on the Japanese Yen.

Why do traders need to scrutinize Japan’s services sector reports?

The services sector accounts for roughly 70% of Japan’s GDP and is the key contributor to inflation, influencing the BoJ’s rate hike plans. Bank of Japan Governor Kazuo Ueda previously commented on the Bank’s focus on services inflation.

USD/JPY Daily Outlook: Job Openings and Fed Speakers in Focus

Later Wednesday, JOLTs job openings will provide insights into the US labor market. Economists forecast job openings to fall from 7.437 million in June to 7.4 million in July.

A sharper drop in job openings would indicate weaker demand for labor and potentially rising unemployment. A cooling labor market may soften wage growth and curb consumer spending, dampening inflation. Weaker private consumption and a softer inflation outlook could raise expectations of multiple Fed rate cuts, pushing USD/JPY toward 147.5.

Conversely, an unexpected rise in job openings could suggest a resilient labor market and robust US economy. A less dovish Fed policy stance may send USD/JPY toward the 149.358 resistance level and potentially 150.

The USD/JPY remains exposed to the prospect of the BoJ and the Fed diverging on monetary policy, potentially triggering USD/JPY volatility.

USD/JPY: Key Scenarios to Watch

• Bearish USD/JPY Scenario: Hawkish BoJ signals, stronger Japanese Services PMI, softer US labor market data, or dovish Fed rhetoric could push USD/JPY toward 147.5
• Bullish USD/JPY Scenario: Dovish BoJ cues, softer Japanese data, strong US data, or hawkish Fed comments may drive the pair toward the 150.

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

While traders speculate over the BoJ rate path, the RBA’s policy stance also faces scrutiny, with economists signaling an RBA rate cut in Q4.

AUD/USD: Aussie GDP and RBA Governor Bullock in the Spotlight

Turning to the AUD/USD pair, second-quarter GDP data will influence the RBA’s rate path and Aussie dollar demand. Economists expect the Australian economy to expand 0.5% quarter-on-quarter in Q2, up from 0.2% growth in the previous quarter.

A stronger economy may temper expectations of a Q4 RBA rate cut, lifting demand for the Aussie dollar. On the other hand, slowing economic momentum may support further monetary policy easing in the fourth quarter.

Later in the session, RBA Governor Michele Bullock is on the calendar to deliver a speech. Will Governor Bullock fuel speculation about a rate cut?

Any forward guidance on the timeline for a rate cut would influence AUD/USD trends. In August, Governor Bullock stated that the Bank will be data-dependent, meaning upcoming policy meetings would be live.

AUD/USD: Key Scenarios to Watch

• Bearish AUD/USD Scenario: Weaker GDP data or dovish RBA cues. These factors could push AUD/USD toward the $0.65 level.
• Bullish AUD/USD Scenario: Stronger GDP data or hawkish RBA rhetoric. These factors could send AUD/USD toward the $0.6550 resistance level.

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

AUD/USD Daily Outlook: How Will Labor Market Data Impact Rate Differentials?

While economists expect a Q4 RBA rate cut, markets remain divided on the remaining number of Fed rate cuts for 2025.

Weaker-than-expected US job openings would support a more dovish Fed rate path. Expectations of multiple Fed rate cuts could narrow the US-Australia interest rate differential in favor of the Aussie dollar. A narrowing rate differential may drive AUD/USD toward $0.6550. A break above $0.6550 could bring the $0.66 level into view.

However, rising job openings could widen the rate differential, pushing AUD/USD toward $0.65 and the 50-day EMA. If breached, the 200-day EMA would be the next key support level.

Key Market Drivers to Watch Today:

• USD/JPY: BoJ commentary and Japanese economic data.
• USD/JPY and AUD/USD: US labor market data.
• AUD/USD: Aussie data and RBA policy signals.

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