AUD/JPY drops below 111.00 as Australia’s Trade Surplus narrows

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AUD/JPY depreciates after registering mild gains in the previous session, trading around 110.80 during the Asian hours on Thursday. The currency cross remains subdued following the release of Australia’s Trade Balance data.

AUD/JPY falls as Australia’s Trade Surplus narrows to 2,631M MoM in January from 3,373M in December 2025.
The Japanese Yen strengthens as the US Dollar weakens on hopes that the Middle East conflict may be brief.
BoJ Governor Ueda warned Middle East tensions could hit Japan’s economy, keeping interest rates unchanged longer.

The Australian Bureau of Statistics on Thursday reported that Trade Surplus narrowed to 2,631M month-over-month (MoM) in January, from 3,373M in December 2025. The market consensus was for 3,900M. Meanwhile, Exports declined by 0.9% MoM from a rise of 0.9% (revised from 1.0%) prior. Meanwhile, Imports rose by 0.8% MoM, compared to a fall of 1.8% (revised from 0.8%) seen in December.

The AUD/JPY cross weakens as the Japanese Yen strengthens against major peers, supported by a softer US Dollar and tentative hopes that the Middle East conflict may be shorter than feared. Reuters cited The New York Times reporting that Iran’s Ministry of Intelligence signalled to the US Central Intelligence Agency (CIA) a willingness to explore talks to end the war. However, Tehran later denied the report, leaving the conflict’s duration and economic fallout uncertain.

However, surging energy prices have fueled concerns about growth and inflation, potentially complicating the Bank of Japan’s (BoJ) rate outlook. BoJ Governor Kazuo Ueda warned that escalating Middle East tensions could materially affect Japan’s economy, suggesting policy rates may remain unchanged for an extended period.

Economic Indicator

Trade Balance (MoM)

The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.