Japanese Yen and Australian Dollar News: US Presidential Election Crucial for Trends

Japan Services PMI Puts the Bank of Japan in Focus

On Wednesday, November 6, Japan’s Services PMI could influence the USD/JPY pair and the Bank of Japan’s rate path. According to the preliminary PMI, the Jibun Bank Services PMI dropped from 53.1 in September to 49.3 in October. If the Services PMI sees a downward revision, investor bets on a December Bank of Japan rate hike may decrease.

Services sector activity is crucial for the BoJ as it contributes around 70% to the Japanese economy. Moreover, the BoJ is eyeing services sector inflation to fuel underlying inflation. Softer price trends could further dampen expectations for a December rate hike, potentially pushing the USD/JPY toward 154.

Bank of Japan’s Stance on Services Sector Inflation

In September, Bank of Japan Governor Kazuo Ueda highlighted the importance of the October services sector data, stating,

“October is a month when service price revisions are concentrated in Japan, so we must scrutinize data carefully.”

While the Services PMI requires consideration, the US Presidential Election results will likely overshadow the PMI data.

Japanese Yen Daily Chart

Turning to the US dollar, the US Presidential Election will be the focal point. A Trump victory could boost US dollar demand, potentially driving the USD/JPY toward 154, a crucial resistance level. Markets consider Trump’s policies inflationary, suggesting a more hawkish Fed rate path.

Conversely, a Harris win may drag the USD/JPY below 150. The results will roll out throughout the day, with the swing state results crucial if the race to the White House is as close as the national polls.

Ai Group Industry Index in Focus

Turning the focus to the AUD/USD pair, the Ai Group Industry Index drew interest on Wednesday. The Ai Group Industry Index unexpectedly declined from -18.6 in September to -28.8 in October.

Economists view the Index as a leading indicator for the Aussie economy, reflecting survey results from critical sectors such as services, manufacturing, and mining. This significant decline could signal looser labor market conditions, potentially curbing spending and demand-driven inflation.

Indications of looser labor market conditions may fuel investor expectations for a December RBA rate cut. A more dovish RBA rate path may drive the AUD/USD toward $0.65500.

Expert Views on Aussie Inflation and the RBA Rate Path

AMP Head of Investment Strategy and Chief Economist Shane Oliver commented on Tuesday’s RBA interest rate decision, stating,

“RBA held at 4.35% citing inflation still too high, excess demand & still tight labour mkt. But it revised growth underlying infl forecasts down slightly. Guidance looks balanced. We continue to see first cut in Feb. Dec possible but needs very low Oct trimmed mean and higher unemp.”

Australian Dollar Daily Chart

Turning our focus to Wednesday’s US session, markets will react to the US Presidential Election result.

The AUD/USD could reverse Tuesday’s gains if Trump wins the election. His plans to introduce tariffs, expectations of increasing protectionism, and geopolitical risks could affect trade, impacting Aussie dollar demand. Conversely, a Kamala Harris win would signal the status quo and a dovish Fed rate path, potentially driving the AUD/USD toward $0.67.

Traders should stay alert. Monitor the US election results, real-time data, central bank views, and expert commentary to adjust your trading strategies accordingly. Stay ahead of the market with our expert insights.