AUD/JPY rises to near 104.00 as Australia’s Trade Surplus widens

• AUD/JPY extends gains as Australia’s Trade Surplus widens amid lower imports.
• Australia’s Trade Balance rose to A$ 6,548 million MoM in May, surpassing the expected A$ 5,500 million.
• BoJ Governor Kazuo Ueda stated that inflation expectations are gradually rising but have yet to reach 2%.

AUD/JPY continues to gain for the second successive day, trading around 103.90 during the European session on Thursday. The AUD/JPY cross strengthened following the release of Australia's Trade Balance, which widened to A$ 6,548 ($ 4,321.68) million month-over-month in May, exceeding the expected A$ 5,500 million and April's balance of A$ 5,024 million. Australia's imports plunged by 7.2% MoM in May, reversing from April’s 4.2% increase, while exports shrank by 2.5% after a previous decline of 0.6%.

The Australian Dollar could appreciate further due to a hawkish statement by Reserve Bank of Australia (RBA) Governor Michele Bullock on Wednesday. Bullock indicated that the central bank is prepared to increase interest rates if the Consumer Price Index (CPI) does not return to the target range of 1%-3%. She also acknowledged that the labor market is easing on several measures, as reported by NCA NewsWire.

On the JPY front, the benchmark 10-year Japan bond yield fell below 1% for the first time in two weeks. According to Reuters, Bank of Japan (BoJ) Governor Kazuo Ueda, speaking to parliament on Thursday, stated that inflation expectations are gradually rising but have yet to reach 2%. Ueda remarked, "We are still scrutinizing market developments since the March decision. As we proceed in exiting our massive monetary stimulus, it's appropriate to reduce bond purchases."

BoJ board member Toyoaki Nakamura also commented that, based on current data, it is suitable to maintain the policy intact for the time being. Nakamura highlighted the weakness in households' purchasing power and emphasized the necessity of a solid increase in disposable income to encourage spending.