AUD/JPY rises to near 104.50 after softer Japan's Weighted Median Inflation

• AUD/JPY appreciated after Japan's Weighted Median Inflation Index showed a slowdown on Tuesday.
• Japan’s Corporate Service Price Index posted a reading of 2.8% YoY in April, marking its fastest increase since March 2015.
• Australia’s Retail Sales grew 0.1% in April, against the expected 0.2% and the previous decline of 0.4%.

AUD/JPY continues its winning streak for the third consecutive session on Tuesday, trading around 104.50 during the European session. The appreciation of the AUD/JPY cross is attributed to the softer Japanese Yen (JPY) following the Bank of Japan (BoJ) publishing the latest data earlier in the day. Japan's Weighted Median Inflation Index, a significant gauge of the country’s inflation trend, increased by 1.1% in April, slowing from the 1.3% increase recorded in March.

However, the Japanese Yen found some strength during the early Asian hours, supported by Japan’s improved Corporate Service Price Index (CSPI). The CSPI posted a year-over-year reading of 2.8% in April, surpassing expectations of 2.3% and marking its fastest rate of increase since March 2015.

Additionally, Japan Finance Minister Shun'ichi Suzuki emphasized the importance of currencies moving in a stable manner that reflects fundamentals. Suzuki stated that he is closely monitoring foreign exchange (FX) movements but refrained from commenting on whether Japan has conducted currency intervention.

Across the pond, the Australian Dollar (AUD) continues to strengthen despite softer Australia's Retail Sales (MoM), which rose by 0.1% in April, swinging from the previous 0.4% decline and falling short of market expectations of 0.2%.

Moreover, the latest Reserve Bank of Australia (RBA) meeting minutes indicated that the board found it difficult to forecast future changes in the cash rate, acknowledging that recent data increase the likelihood of inflation persisting above the 2-3% target for an extended period.