AUD/JPY Hangs Tough Near 97.00 After Australia's Trade Data Blows Past Expectations

The AUD/JPY cross is stubbornly maintaining its position around 96.80 during Asian trading Thursday, continuing what's become an impressive winning streak since August 21. I've been watching this pair closely, and today's Australian Trade Balance data has certainly given bulls something to smile about.

Australia just dropped some seriously impressive numbers - a Trade Balance that widened to a whopping 7,310 million month-over-month in July, absolutely demolishing expectations of 4,920 million. That's not just good - it's a statement. Exports jumped 3.3% while imports actually fell by 1.3%. Talk about punching above your weight!

What's really interesting here is how these strong trade figures, combined with those robust Q2 GDP numbers released yesterday (0.6% quarter-over-quarter growth versus the expected 0.5%), are reshaping market expectations around RBA policy. Swap markets have basically thrown in the towel on expecting another rate cut in September - there's now only about a 10% chance the RBA moves then. Can't say I blame them!

Meanwhile, over in Japan, BoJ Governor Ueda keeps singing the same tune - rate hikes are coming if growth and inflation stay on track. I'm not entirely convinced they'll pull the trigger anytime soon though. The yen remains painfully weak, and Friday's wage data will be crucial.

I also noticed Japan's trade negotiator Akazawa is in the US right now pushing for tariff agreements. Fascinating timing given how fragile global trade relationships are becoming. This cross-currency pair is sitting at the intersection of several major economic storylines.

Looking at the technical picture, AUD/JPY has been on a tear since late August. This pair could easily push higher if Australia continues to defy the economic doomsayers with solid data. The 97.00 level is providing some resistance, but a decisive break above could open the door to further gains.

Between Australia's surprisingly resilient economy and Japan's cautious approach to tightening, I'm leaning bullish on this pair despite the obvious global growth concerns weighing on the Aussie. Sometimes the market narrative just doesn't match the actual economic data - and that's exactly what we're seeing here.