• AUD./JPY oscillates in a narrow trading band and is influenced by a combination of factors. 
• Intervention fears, BoJ rate hike bets and US political jitters underpin the safe-haven JPY.
• The Chinese macro data does little to impress the AUD bulls or provide impetus to the cross.

The AUD/JPY cross struggles for a firm intraday direction on Monday and seesaws between tepid gains/minor losses during the Asian session. Spot prices hold steady around the 107.00 round-figure mark and react little to rather unimpressive Chinese macro data. 

The National Bureau of Statistics (NBS) reported that China’s economy expanded by 4.7% over the year in the second quarter of 2024, compared to a 5.3% expansion in the first quarter. On a quarterly basis, the Chinese economy grew by 0.7% in Q2 2024 as compared to the 1.5% registered in the previous quarter. Meanwhile, China’s Retail Sales climbed 2.0% YoY in June vs. 3.1% expected and 3.7% prior, while the country’s Industrial Production came in at 5.3% YoY vs. 5.0% estimates and May’s 5.6%. Moreover, the Fixed Asset Investment increased by 3.9% YTD YoY in June vs 3.9% expected and 4.0% last. The data, however, does little to provide any meaningful impetus to the China-proxy Australian Dollar (AUD), though bets that the Reserve Bank of Australia (RBA) could possibly be raising interest rates again act as a tailwind for the AUD/JPY cross.

The Japanese Yen (JPY), on the other hand, draws some support from rising bets that the Bank of Japan (BoJ) may raise interest rates in response to a weakening domestic currency. Adding to this, speculation that Japanese authorities might step into the market to lift the domestic currency, along with the US political jitters in the wake of an alleged assassination attempt on former US President Donald Trump, lend support to the safe-haven JPY. This, in turn, is holding back traders from placing aggressive directional bets around the AUD/JPY cross and leading to subdued range-bound price action on the first day of a new week. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the recent pullback from the highest level since May 1991, around the 109.35 region touched last Thursday.