AUD/JPY declines by 0.61% on Thursday, trading around 111.40 at the time of writing.
The Australian Dollar (AUD) comes under pressure after trade data missed expectations by a wide margin, while the Japanese Yen (JPY) remains supported by speculation over a potential intervention from Japanese authorities
According to the Australian Bureau of Statistics, Australia’s Trade Balance shifted to a deficit of A$3.018B in May, following a revised surplus of A$1.383B in April. Markets had expected another surplus of A$2.2B. The deterioration was mainly driven by a 6.9% monthly decline in exports, while imports increased by 2.6%.
The weak trade figures add to concerns about Australia’s economic outlook. Commerzbank also believes markets are overestimating the chances of another Reserve Bank of Australia (RBA) rate hike this year. The bank argues that falling Oil prices have reduced upside inflation risks, while the accelerating decline in housing prices could weigh on consumer spending.