Japanese Yen and Aussie Dollar Forecasts: USD/JPY Dips as Exports Rebound, BoJ Eyed

USD/JPY: Trade Data to Spotlight the Bank of Japan

The Japanese economy came under scrutiny on Wednesday, October 22, fueling uncertainty about the BoJ rate path and USD/JPY price outlook.

Japanese exports surged 4.2% year-on-year in September after falling 0.1% in August, while imports increased 3.3% (August: -5.2%).

The sharp rebound in exports followed August’s US-Japan trade deal, which lowered tariffs on Japanese goods to 15%. Lower tariffs lifted demand for Japanese goods, bolstering the Japanese economy, given that Japan has a trade-to-GDP ratio of almost 50%.

Crucially, September’s data could signal a pickup in economic momentum, a tighter labor market, and higher wages. Higher wages may fuel consumer spending and demand-driven inflation, supporting a more hawkish BoJ policy stance.

The USD/JPY pair eased back from an early high of 151.959 to 151.927 after the data.

Why Do USD/JPY Traders Need to Consider Japan’s Global Trade Terms?

In September, the Bank of Japan’s Summary of Opinions highlighted concerns about US trade policies weighing on the Japanese economy. One policymaker stated:

“US tariffs will still have an impact on Japan’s economy, even after the rate was reduced to 15 percent, and the outlook for the economy remains unchanged, namely that economic growth is likely to moderate temporarily. […] In this situation, the Bank should, at this point, maintain accommodative financial conditions with the current interest rate level and thereby firmly support the economy.”

Other policymakers also urged caution, given the potential impact of US trade policy on the global economy.

Capitol Hill and the USD/JPY Outlook

Across the Pacific, traders await crucial US economic indicators, including the jobs report, ahead of the Fed interest rate decision on October 29. However, the US government shutdown extended to 21 days on Wednesday, October 22, further delaying US economic reports.

The absence of economic data and the Fed’s blackout period leave US-China trade developments and Capitol Hill in focus.

A further easing in US-China trade tensions ahead of the APEC Summit could lift US dollar demand, sending USD/JPY toward the October 10 high of 153.274.

On the other hand, renewed tensions could trigger a flight to safety, pushing USD/JPY toward 150.

While trade developments remain a key driver, traders should closely monitor Capitol Hill. An end to the Senate stalemate could expedite the release of economic reports, potentially influencing the Fed rate path.

USD/JPY Scenarios: BoJ Uncertainty and Dovish Fed Bets

Market scenarios for USD/JPY will hinge on central bank rhetoric and trade headlines.

• Bearish USD/JPY Scenario: hawkish BoJ rhetoric or increasing US-China trade friction could push USD/JPY toward 150.
• Bullish USD/JPY Scenario: dovish BoJ chatter or cooling US-China trade tensions could send USD/JPY toward 153.274.

Read the full USD/JPY forecast, including chart setups and trade ideas.

Beyond Japan, US-China trade news and any policy announcements from Beijing may influence AUD/USD amid rising bets on a November RBA rate cut.

Aussie Dollar Under Pressure

Turning the focus to the AUD/USD pair, a US-Aussie trade deal and easing US-China trade tensions failed to boost demand for the Aussie dollar. Recent Aussie economic data have revived bets on a November RBA rate cut, pushing the pair below $0.65.

Crucially, the unemployment rate unexpectedly increased from 4.3% in August to 4.5% in September.

A cooling labor market may soften wage growth and potentially curb consumer spending. A pullback in consumption could dampen demand-driven inflation, supporting a more dovish RBA rate path. Notably, AUD/USD tumbled below the $0.645 level before partially recovering on US-China headlines and upbeat Chinese economic data.

With China under the spotlight, traders should closely monitor updates from the ongoing Communist Party Fourth Plenum. Fresh policy measures to bolster China’s housing and labor market could lift demand for the Aussie dollar. On the other hand, silence on fresh stimulus ahead of the APEC Summit may leave AUD under pressure.

Looking ahead, with the labor market data lifting bets on a rate cut, next week’s inflation data for the third quarter will likely determine whether the RBA makes a monetary policy adjustment. The quarterly numbers are set for release on Wednesday, October 29.

Economists forecast the RBA Trimmed Mean CPI to rise 2.6% year-on-year in the third quarter, down from 2.7% in the second quarter. Easing inflationary pressures may cement bets on a November rate cut and fuel expectations of further rate cuts in early 2026.

US Government Shutdown, Trade Developments, and AUD/USD

AUD/USD was up 0.06% to $0.64915 in early trading on Wednesday, October 22. Hopes of a US-China trade deal and a potential boost in demand for Chinese goods continued to bolster support for the Aussie dollar.

Later on Wednesday, traders will continue to monitor developments on Capitol Hill and US-China trade-related chatter. US Treasury Secretary Scott Bessent is due to meet China’s Vice Premier He Lifeng to continue trade talks.

Progress toward a trade deal may send AUD/USD above its 200-day EMA. A sustained move through the 200-day EMA could bring the 50-day EMA and $0.6550 into play.

Conversely, stalled talks may push the pair toward $0.6450.

AUD/USD: Key Scenarios to Watch

• Bearish AUD/USD Scenario: Dovish RBA comments or renewed trade tensions may push AUD/USD toward $0.6450. If breached, $0.6400 would be the next key support level.
• Bullish AUD/USD Scenario: Hawkish RBA chatter and progress toward a US-China trade deal may send AUD/USD toward $0.6550.

See our full AUD/USD analysis for detailed trends and trade setups.

Key Market Drivers to Watch Today:

• USD/JPY: BoJ commentary.
• USD/JPY and AUD/USD: US-China trade news and Capitol Hill-related updates.
• AUD/USD: RBA rhetoric and Beijing stimulus announcements.

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