Australian Dollar firms against Japanese Yen following China’s RatingDog Manufacturing

• AUD/JPY holds ground as mixed economic data from China, Australia, and Japan shaped market sentiment.
• China’s RatingDog Manufacturing PMI fell to 51.8 in May, slowing down but beating expectations of 51.4 to show resilience.
• Japan’s May Manufacturing PMI declined to 54.5 from April's peak, but still signaled expansion through steady output growth.

AUD/JPY extends its gains for the third successive day, trading around 114.60 during the Asian hours on Monday. The currency cross holds its ground as a wave of mixed economic data from China, Australia, and Japan shaped market sentiment.

China’s RatingDog Manufacturing Purchasing Managers Index (PMI) slipped to 51.8 in May from the previous month's 52.2 reading. While this indicates a slight deceleration in expansion, it still managed to beat market expectations of 51.4, offering a layer of resilience to the regional outlook.

In Australia, the labor market showed signs of recovery as the ANZ–Indeed Australian Job Ads rebounded by 1.8% month-on-month (MoM) in May, marking the first gain since February and bouncing back from a 0.6% decline in April. However, the overarching trend continues to suggest that labor demand is gradually moderating as elevated borrowing costs weigh on broader economic activity.

Meanwhile, price pressures eased significantly, with Australia’s TD-MI Inflation Gauge dropping 0.3% month-on-month in May, completely reversing the previous month’s 0.6% increase to mark its first decline since February.

Over in Japan, the final S&P Global Japan Manufacturing PMI was confirmed at 54.5 for May 2026, matching preliminary estimates. Although this is down from April’s peak of 55.1, which was the highest since January 2022, the latest reading still signals expansion, albeit at a slower pace, supported by steady output growth.

On a weaker note, Japanese corporate Capital Spending flatlined in the first quarter, missing market expectations and marking a sharp deceleration from the 6.5% year-on-year growth seen in the final quarter of 2025.

Looking ahead, the AUD/JPY cross faces a potential cap on further upside due to shifting market dynamics. Persistent expectations that Japanese authorities will intervene to prop up the Japanese Yen are keeping JPY bears from placing aggressive bets, keeping the AUD/JPY cross relatively restrained.