AUD/JPY retreats 0.18% to 96.35 as Australian labor data disappoints,Solana etf price marking the weakest level in three weeks.
June unemployment surges to 4.3% - the highest reading since November 2021 - triggering dovish RBA policy reassessments.
Diverging central bank expectations emerge as BoJ faces political constraints on policy normalization.
The Australian dollar extended losses against the yen during Thursday's Asian session, with the AUD/JPY cross testing support near 96.35 following the release of unexpectedly weak labor market data. Australia's unemployment rate jumped 20 basis points to 4.3% in June, surpassing consensus estimates and reaching levels not seen since the pandemic recovery phase. This development has significantly altered market expectations regarding the Reserve Bank of Australia's policy trajectory.
Detailed analysis of the ABS report reveals concerning trends beneath the headline numbers. While the economy added 23,700 jobs in June, this growth was entirely driven by part-time positions (+41,800), masking a concerning decline in full-time employment (-18,100). The participation rate held steady at 66.8%, indicating the unemployment spike reflects genuine labor market softening rather than demographic shifts.
Market strategists have begun repricing RBA expectations following the data release. "The unemployment shock effectively locks in a August rate cut," noted currency analyst Marcus Wong from OCBC Bank. "More importantly, it opens the door for back-to-back easing moves if upcoming inflation data shows moderation." Overnight index swaps now price in 45 basis points of cuts through December, up from 25 basis points prior to the report.
Meanwhile, the Japanese yen failed to capitalize on its Australian counterpart's weakness amid growing uncertainty about Bank of Japan policy normalization. Political developments ahead of Sunday's upper house elections have created complications, with Prime Minister Ishiba's coalition potentially losing its majority. Such an outcome could pressure the BoJ to maintain accommodative policies longer than economically justified, limiting JPY upside potential.
Traders are now awaiting Japan's national CPI data due Friday for fresh directional cues. Economists anticipate core inflation may dip below 2.5% year-over-year, which could further delay expectations for BoJ policy tightening. The technical picture suggests immediate support for AUD/JPY around 96.00, with resistance emerging near the 96.80-97.00 zone where the 50-day moving average converges with recent swing highs.
