AUD/JPY Slides to 110.80 After Australian Unemployment Hits 4.6%
The Australian Dollar fell to 110.80 against the Yen after August unemployment rose to 4.6% and Japan's PMI data slowed.
Key points
- AUD/JPY traded around 110.80 on Thursday after Australia's unemployment rate rose to 4.6% in August.
- Full-time employment in Australia fell by 6.3K while part-time jobs increased by 45.8K during the period.
- Japan's Composite PMI Business Activity Index decreased to 52.5 in September from 53.5 in August.
The AUD/JPY pair dropped to 110.80 during Asian trading on Thursday. This marks the second consecutive day of losses for the currency cross. The decline followed the release of mixed Australian labor market data. Investors reacted to the rising unemployment rate in the Southern Hemisphere.
Australia’s unemployment rate climbed to 4.6% in August. This figure exceeded the market consensus of 4.5%. The rate also marked an increase from 4.5% in July. The labor participation rate rose slightly to 67.1% during the same period.
Labor Market Weakness Drives Currency Down
Total employment added 39.5K jobs, beating expectations. However, this rebound masked underlying structural weakness in the market. Full-time employment contracted by 6.3K positions in August. Conversely, part-time roles surged by 45.8K during the month.
The split between full-time and part-time hiring created a bearish signal. Traders interpreted the data as evidence of softening demand for core workers. This view pressured the Australian Dollar against the Japanese Yen. The pair continued to trade under significant downward momentum.
Japan Data and Geopolitical Factors
Japan’s private sector activity cooled according to preliminary September PMI data. The Composite PMI Business Activity Index fell to 52.5. This was a drop from the August final reading of 53.5. Growth momentum eased across both manufacturing and services sectors.
The Services PMI declined to 51.6 from a five-month high. The Manufacturing PMI dropped to 54.1, missing the 55.0 forecast. Despite the miss, this marked the ninth consecutive month of expansion. Japanese Finance Minister Satsuki Katayama confirmed recent currency intervention principles remain fully in effect.
Trade Truce and Bank Lending Trends
US Treasury Secretary Scott Bessent confirmed an extension of the trade truce with China. The agreement now runs through January 10. This pushes back the original November deadline significantly. The decision followed an unscheduled meeting in Washington with Chinese Vice Premier He Lifeng.
Rabobank analysts noted the deepening alignment between the US and Japan. This cooperation now encompasses the Bank of Japan and yen carry trade dynamics. They highlighted that Japan’s big banks see a sustained rise in domestic loan share. This is the first such rise since the 1991 bubble burst.
