The AUD/JPY pair saw a rise as Australia’s Composite PMI was revised upward to 50.2 in December, signaling modest growth in the private sector. The Caixin China Services PMI also increased to 52.2, reflecting a robust performance in China’s services sector. On the other hand, Japan’s composite and services PMIs for December were revised downward, impacting the Bank of Japan’s policy outlook.
The AUD/JPY cross continued to climb for the third consecutive day, trading around 98.50 during European hours. This increase was attributed to the improved Australian Dollar following positive economic indicators from both Australia and China. The close trade relationship between the two countries means that changes in China’s economy often impact Australian markets significantly.
Australia’s Composite PMI for December showed modest growth, with services driving the expansion while manufacturing output continued to contract. The Services PMI also expanded for the eleventh straight month. In China, the Caixin Services PMI exceeded market expectations, indicating strong growth in the services sector, which is vital to China’s economy.
China’s commitment to opening up its capital markets to foreign institutions was reported by Reuters on Monday. This demonstrates the country’s solid economic fundamentals and resilience in the face of a challenging global environment. In Japan, the downward revision of composite and services PMIs reinforces a dovish outlook on the Bank of Japan’s policy, putting pressure on the Japanese Yen.
Despite the lower revision in Japan’s services PMI, it still showed growth for the second consecutive month, while the Composite PMI improved slightly from November. This marginal expansion was driven by growth in the services sector and a softer contraction in manufacturing output. The overall trend indicates some positive momentum in Japan’s economy, albeit at a modest pace.
