AUD/JPY falls toward 95.50 as Japan’s economy expands in Q2

• AUD/JPY depreciates as the Japanese Yen gains ground following stronger Japanese Q2 Gross Domestic Product data.
• Japan’s Q2 Gross Domestic Product increased by 0.3% QoQ, up from 0.1% in Q1.
• China’s Retail Sales climbed 3.7% YoY in July, falling short of the 4.6% expected and 4.8% in June.

AUD/JPY extends its losses for the second successive session, trading around 95.60 during the Asian hours on Friday. The currency cross depreciates as the Japanese Yen (JPY) advances following stronger-than-expected Japanese Gross Domestic Product (GDP) data for the second quarter.

Japanese Gross Domestic Product increased by 0.3% quarter-over-quarter in the second quarter, following a 0.1% rise in Q1, as expected. GDP Annualized expanded by 1.0% in Q2, compared to a contraction of 0.2% in the first quarter and consensus estimates for a 0.4% rise. The economic growth was supported by net exports, which added 0.3% despite headwinds from US tariffs.

Japan’s Economy Minister Ryosei Akazawa noted that the data indicated the economy is recovering modestly. Akazawa, however, highlighted that risks from US trade policies could weigh on growth, while rising prices could dampen consumer sentiment and hurt private consumption.

The downside of the AUD/JPY cross could be limited as the Australian Dollar (AUD) gains ground against its peers. However, the AUD faced a slight challenge following the release of disappointing key economic data from China, Australia’s major trading partner.

China’s Retail Sales rose 3.7% year-over-year in July, falling short of 4.6% expected and 4.8% in June. Meanwhile, Industrial Production increased 5.7% YoY, compared to the 5.9% forecast and 6.8% seen previously.