The Aussie remained range-bound against the yen yesterday, despite the release of overwhelmingly positive Australian building approval data for November. Japan’s household spending data for November was worse than anticipated. However, the market continues to expect the end of monetary stimulus in Japan. This enables the yen to maintain its ground against its rivals, including the Aussie. Overall, the AUD/JPY pair traded in a narrow range of between 96.41 and 96.93 in the past 24 hours.
According to Japan’s Statistics Bureau, Tokyo’s core consumer price index (CPI) rose by 2.10% y-o-y in December, following a 2.30% rise in the previous month and in line with economists’ estimates. This is the second consecutive monthly decline, relieving stress on the Bank of Japan to end its ultra-loose monetary policy.
The “core core” index, which is devoid of both fresh food and fuel prices, grew by 3.50% y-o-y in December, following a 3.60% rise in November.
As inflation has been above the BoJ’s targeted level of 2% for over a year, several market participants anticipate the bank will begin exiting its huge stimulus in the months ahead.
BOJ Governor Kazuo Ueda has emphasized the necessity of maintaining an extremely accommodative monetary policy until the current cost-push inflation gives way to a demand-driven rise in prices, aided by considerable wage increases.
In a separate news release, Japan’s Statistics Bureau stated that the country’s household spending declined by 2.90% y-o-y in November, following a 2.50% decrease in the previous month and worse than forecasts of a 2.20% decrease. Rising prices discouraged people from loosening their purse strings. The reported figure reflects the 10th decline this year, led by a 1.20% decrease in spending on food.
Likewise, spending on fuel, light, and water charges inched down by 0.80% y-o-y in November. Spending on housing plunged 20.90%. While transport and communication recorded a decline of 5.20% y-o-y in November, medical care recorded a decrease of 3.20%. Spending on education plummeted by 11%. On the contrary, expenditures for furniture and household utensils grew by 4.70% y-o-y in November. Also, clothing and footwear spending jumped 15.40% in the same period.
According to the Australian Bureau of Statistics (ABS), the country’s retail sales grew by 2% m-o-m in November, following a decline of 0.40% in October and greater than forecasts of 1.20% growth.
On a y-o-y basis, Australian retail sales rose by 2.20% in November 2023.
In value terms, aggregate online retail sales were A$3.84 billion in November. Online sales grew by 3% (or A$113.30 million) in November, following a 0.30% (A$9.50 million) rise in October.
Food online sales and non-food online sales were A$1.18 billion and A$2.66 billion, respectively. Overall, food sales inched up 0.10% (or A$0.80 million) in November. Non-food sales grew by 4.40% (or A$112.50 million) in the same period.
The ABS also stated that building approvals grew by 1.60% m-o-m in November to 14,529 units, following a 7.20% rise in the previous month. Economists had anticipated a 1.90% decline in building approvals.
Private sector houses declined 1.70% m-o-m in November to 8,506 units. However, private sector dwellings, excluding houses, grew by 6.70% to 5,856 units.
The value of total buildings approved decreased 9.20% in November, following an 8.10% rise in October. The value of aggregate residential buildings decreased by 2.10% in November. The value of non-residential buildings declined 18% in the same period.
The solid Australian building approval data is expected to turn the AUD/JPY pair slightly bullish in the short term.
The historical price chart indicates that the AUD/JPY pair is declining after facing resistance at 97.40. The next support is anticipated to be near 95.45. Additionally, the currency pair is trading below its 50-day moving average, while the stochastic indicator is in the bearish zone. Therefore, we anticipate the AUD/JPY pair to decline further in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
