- The AUD/JPY depreciates as optimistic data of Japan machinery orders increase the possibilities of rates increases by the BOJ.
- The JPY continues to gain ground due to the increase in the potential of a commercial agreement between the US and Japan.
- Australia’s manufacturing PMI remains stable in 51.7 in May, while the services PMI decreases to 50.5.
The AUD/JPY reaches a new minimum of two weeks, quoting around 92.30 during the European hours of Thursday. The Japanese Yen (JPY) could be seen even more in front of his peers, since the optimistic data of machinery orders in Japan increase the probabilities of more increases in rates by the Bank of Japan (BOJ) while counteracting the fears of recession and encourages the hopes of an economic recovery.
In addition, the JPY attracts buyers since Japan is expected to firm a commercial agreement with the United States (USA). It is expected that Japan’s Minister, Ryosei Akazawa, attends the next third round of conversations at the ministerial level with the US trade representative, Jamieson Greer. In addition, US Treasury Secretary, Scott Besent, is also likely to participate in commercial negotiations.
On Thursday, the data showed that the basic machinery orders of Japan, a key indicator of capital expenditure in the next six to nine months, increased 13.0% in March, compared to the expected fall of 1.6%. This is the highest level in almost two decades.
The negative side of the Aud/JPY crossing could be limited as the Australian dollar (AUD) moves up after the publication of the preliminary data of the Purchase Management Index (PMI) of Global S&P. The Australian Manufacturing Purchase Managers Index (PMI) remains stable in 51.7 in May. Meanwhile, the PMI of services decreases to 50.5 from the previous reading of 51.0, while the compound PMI is softened to 50.6 in May compared to 51.0 above.
The AU has recovered the losses recorded on Tuesday, after the decision of the Bank of the Australian Reserve (RBA) of a rate cut of 25 basic points. In addition, the Governor of the RBA, Michele Bullock, supported the decision -cut decision of the Central Bank. Bullock pointed out that it is important to stop inflation and said that a rate cut was a proactive movement that generates trust and that it was adequate given the state of the economy.
FAQS tariffs
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
