Australian Dollar declines against Japanese Yen following mixed jobs data

• Australia’s Unemployment Rate rose to 4.6% as full-time jobs fell, overshadowing a gain in Part-Time Employment.
• US Treasury Secretary Bessent extended the bilateral trade truce with China through January 10.
• Japan Private Sector Cools as preliminary September PMIs showed slower expansion across manufacturing and services as growth momentum eased.

AUD/JPY extends its losses for the second successive day, trading around 110.80 during Asian hours on Thursday. The currency cross continues to trade under pressure as the Australian Dollar (AUD) remains subdued following the release of the latest domestic labor market data.

Australia’s Unemployment Rate rose to 4.6% in August, ticking up from 4.5% in July and exceeding market expectations of 4.5%. Despite the overall Employment Change beating forecasts with an addition of 39.5K jobs, rebounding sharply from a revised 15.9K loss in July, the underlying data revealed weakness, as full-time employment contracted by 6.3K while part-time roles surged by 45.8K. Concurrently, the labor participation rate edged up to 67.1%.

On the geopolitical front, US Treasury Secretary Scott Bessent confirmed that the United States and China have agreed to extend their bilateral trade truce through January 10, pushing back the original November deadline following an unscheduled meeting in Washington with Chinese Vice Premier He Lifeng. As China and Australia are close trading partners, any change in the Chinese economy could impact the Australian Dollar.

In Japan, S&P Global Composite PMI Business Activity Index edged down to 52.5 in September from August’s final reading of 53.5, according to flash data. The slowdown was reflected across both major sectors, with the S&P Global Services PMI falling to 51.6 from August's five-month high of 52.5. Meanwhile, the Japan Manufacturing PMI declined from 54.9 to 54.1, missing market expectations of 55.0 despite signaling a ninth consecutive month of expansion in factory activity.

Japanese Finance Minister Satsuki Katayama stated on Thursday that foreign exchange principles established during the recent coordinated Japan-US currency intervention remain fully in effect. While reaffirming the commitment to joint policy frameworks, Katayama declined to comment on specific exchange rate levels.

US-Japan alignment extends from geopolitics into yen carry and bank lending

Analysts at Rabobank highlight that the deepening alignment between the US and Japan now spans both geopolitics and financial markets. They note that “Trump and Japan’s PM Takaichi met to reaffirm their close geopolitical and geoeconomic alliance,” and that this “now encompasses the BoJ and the Yen carry trade too.” In parallel, Rabobank points out that “Japan’s big banks' domestic loan share is seeing its first sustained post-1991 bubble burst rise,” a development they describe as “exactly what the White House and Takaichi want as (defence) industry investment rises.”