AUD/JPY slips near 94.50 as inflation expectations ease in Australia

• AUD/JPY depreciates as Australia's Consumer Inflation Expectations rose 3.9% in August, down from 4.7% previously.
• Australia's S&P Global Manufacturing PMI rose to 52.9, while Services PMI climbed to 55.1 in August.
• The Japanese Yen faces challenges amid persistent uncertainty over the BoJ's policy outlook.

AUD/JPY continues its losing streak for the third successive session, trading around 94.60 during the Asian hours on Thursday. The currency cross depreciates as the Australian Dollar (AUD) loses ground, as Consumer Inflation Expectations rose 3.9% in August, coming in below the previous increase of 4.7%.

The Australian Dollar failed to draw any support from the improved preliminary data of S&P Global Australia's Purchasing Managers Index (PMI). Australia's S&P Global Manufacturing PMI came in at 52.9 in August, against 51.3 prior. Meanwhile, Services PMI rose to 55.1 from the previous reading of 54.1. The Composite PMI improved to 54.9 from 53.8 previously.

The Reserve Bank of Australia (RBA) is expected to remain cautious after last week's rate cut. Traders anticipate that the central bank to resume easing with a larger 50 basis-point rate cut, likely in November.

Japan's Jibun Bank Manufacturing PMI improved to 49.9 in August from the previous month's final reading of 48.9, though it remained in contraction territory for the second straight month. Meanwhile, Services PMI fell to 52.7 from July's five-month high of 53.6, though it marked the fifth consecutive month of expansion in the services sector.

The downside of the AUD/JPY cross could be restrained as the Japanese Yen (JPY) faces challenges amid prevailing uncertainty over the Bank of Japan's (BoJ) policy outlook. BoJ Governor Kazuo Ueda has remained cautious, emphasizing that "underlying inflation" is yet to firmly reach the 2% target.

However, domestic inflation stays elevated and wages continue to lag behind price growth, raising the likelihood of the BoJ rate hikes. Additionally, the Bank of Japan raised its inflation forecast at its July meeting, increased the odds of a rate hike by year-end.