Japanese Yen and Aussie Dollar Forecasts: USD/JPY Hits 152 as Wage Growth Slows

Japan Wage Growth Slows, Adding to BoJ Hike Uncertainties

Japanese economic data tempered expectations of an October Bank of Japan rate hike, sending USD/JPY to 152.377 in the early trading session on Wednesday, October 8.

Average cash earnings increased 1.5% year-on-year in August, down sharply from 3.4% in July. Softer wage growth is expected to weaken household spending, potentially cooling demand-driven inflation. Crucially, the softer wage growth figures followed recent comments from BoJ Governor Kazuo Ueda, who raised concerns about tariffs affecting wages, stating:

“If uncertainty regarding overseas economies and trade policies remains high, firms may place stronger emphasis on cost-cutting and may weaken their efforts to reflect price increases in wages.”

Sanae Takaichi, the new leader of Japan’s Liberal Democratic Party and potentially Prime Minister, also underscored the need for sustained wage growth for further monetary policy tightening. She stated:

“Demand-pull inflation — wage increases driving demand growth, leading to a gradual rising of prices and corporate profits — is the best outcome. Until such a situation emerges, we must maintain close communication with the Bank of Japan. We must stay in sync.”

Takaichi’s support for ultra-loose monetary policy and today’s wage growth data sent USD/JPY to its highest level since February 2025.

FOMC Meeting Minutes, Fed Speakers, Capitol Hill, and USD/JPY Outlook

Across the Pacific, market focus remains on the US government shutdown and the Fed’s upcoming interest rate decision. Overnight, lawmakers failed to reach an agreement on a stopgap funding bill needed to reopen the government.

A prolonged shutdown could weigh on the US economy and further delay key economic data releases. The Fed typically adopts a more dovish stance during extended shutdowns, reinforcing expectations for policy easing. With the next Senate vote today, the US dollar could face selling pressure if the vote fails to reach the 60 required to pass the stopgap funding bill.

Meanwhile, Fed speakers and the FOMC meeting minutes will also require consideration amid rising bets on multiple Q4 rate cuts. FOMC voting members Michael Barr, Alberto Musalem, and alternate member Neil Kashkari are on the calendar to speak. Views on the shutdown, the economic outlook, and inflation could influence USD/JPY trends.

USD/JPY Scenarios: Political Factors, BoJ Policy, and Dovish Fed Risks

• Bearish USD/JPY Scenario: hawkish BoJ signals or dovish Fed rhetoric could push USD/JPY toward 150.
• Bullish USD/JPY Scenario: dovish BoJ cues or hawkish Fed signals could drive the pair toward the February 2025 high of 155.88.

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

As traders lower bets on an October BoJ policy adjustment, uncertainty lingers over the RBA’s rate path, spotlighting AUD/USD.

Aussie Inflation and the Aussie Dollar in the Spotlight

Turning focus to the AUD/USD pair, Aussie inflation and labor market data are clouding the RBA’s rate path. Australian ANZ-Indeed job ads slid 3.3% month-on-month in September, accelerating from a 0.3% drop in August. The job ad slump followed August’s sharp drop in full-time employment, signaling a deteriorating labor market. A softer labor market may curb wage growth, dampening inflation.

However, recent inflation figures have raised doubts about a November RBA rate cut, fueling monetary policy uncertainty. The Aussie Monthly CPI Indicator rose to 3% in August, reaching the top end of the RBA’s 2-3% target range, up from 2.8% in July. While recent labor market data has weighed on the Aussie dollar, AUD/USD remains above August levels, underscoring uncertainty over the timing of an RBA rate cut.

On Friday, October 10, RBA Governor Michele Bullock may share views on recent data and the RBA’s policy stance.

AUD/USD: Key Scenarios to Watch

• Bearish AUD/USD Scenario: Weaker Aussie data, dovish RBA rhetoric, and rising trade tensions may drag AUD/USD toward the 50-day EMA and $0.655.
• Bullish AUD/USD Scenario: Stronger Aussie data, hawkish RBA cues, and easing trade friction could drive AUD/USD toward $0.66.

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

US Politics, Fed Speakers, and Interest Rate Differentials

While Aussie economic data continues to fuel speculation about an RBA rate cut, developments on Capitol Hill and Fed speakers will also influence AUD/USD trends.

Another failed Senate vote and growing calls for back-to-back Fed rate cuts in October and December would narrow the US-Aussie rate differential, favoring the Aussie dollar. A narrower rate differential would likely drive AUD/USD toward $0.66. A sustained move above $0.66 could bring $0.665 into play.

On the other hand, a US government reopening and rising support to delay monetary policy easing could widen the rate differential, favoring the US dollar. A wider rate differential may push AUD/USD toward the 50-day EMA and $0.655. If breached, $0.65 would be the next key support level.

Key Market Drivers to Watch Today:

• USD/JPY: BoJ speeches and political developments.
• USD/JPY and AUD/USD: Fed speakers and Senate votes.
• AUD/USD: RBA speeches, Aussie data, and trade updates.

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