AUD/JPY drops to near 97.50 following key economic data

• AUD/JPY extends losses following the Jibun Bank Services PMI data on Wednesday.
• Japan's Services PMI came in at 53.7 in August, against the estimated 54.0, marking the seventh consecutive month of expansion.
• The Aussie Dollar declined as GDP reported a 0.2% increase in QoQ for Q2, falling short of the expected 0.3% readings.

AUD/JPY depreciates for the second successive day, trading around 97.50 during the European hours on Wednesday. The downside of the AUD/JPY cross could be attributed to the improved Japanese Yen (JPY) following the release of the Jibun Bank Services PMI data on Wednesday. The index was revised to 53.7 in August from an initial estimate of 54.0. Although this marks the seventh consecutive month of expansion in the service sector, the latest figure remains unchanged from July.

On Wednesday, Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated that he is "closely monitoring domestic and international market developments with a sense of urgency." Hayashi emphasized the importance of conducting fiscal and economic policy management in close coordination with the Bank of Japan (BoJ). He also stressed the need for a calm assessment of market movements but declined to comment on daily stock fluctuations.

The Australian Dollar (AUD) extends its losses following the release of Australia's Gross Domestic Product (GDP), which posted a 0.2% increase in QoQ for the second quarter, up from the previous quarter's 0.1% but falling short of the expected 0.3% readings.

Additionally, China's Services Purchasing Managers' Index (PMI) fell from 52.1 in July to 51.6 in August, which is notable considering the close trade relationship between China and Australia. Moreover, Bank of America (BoA) has revised its economic growth forecast for China, lowering its 2024 projection to 4.8% from the previous 5.0%. For 2025, the forecast is adjusted to 4.5% growth, while the 2026 outlook remains unchanged at 4.5%.