Australia’s Q1 2026 GDP growth slowed to 0.3%, below the 0.5% estimate, weakening RBA rate hike expectations.
The Australian Dollar retreated against the Japanese Yen, trading below its September 1990 peak near 115.00 after Australia’s first-quarter GDP growth fell short of expectations. The economy expanded by 0.3% in Q1 2026, down from 0.8% in Q4 2025 and missing forecasts of 0.5% growth.
Weaker consumer inflation and a rise in unemployment to a four-and-a-half-year high have further reduced bets on a Reserve Bank of Australia rate hike in June. Geopolitical tensions and supply chain disruptions in the Middle East continue to weigh on the AUD, while Japan’s services sector stagnated in May, adding pressure to the JPY.
The AUD/JPY cross held above 114.50 during the Asian session but remained vulnerable to further downside amid shifting monetary policy expectations.