CFD Trading Rate Australian Dollar vs Japanese Yen (AUDJPY)

• AUD/JPY gains ground due to increased uncertainty surrounding the BoJ policy outlook.
• The AUD appreciated as the RBA Meeting Minutes emphasized the importance of maintaining a restrictive monetary policy.
• The risk-sensitive AUD could have faced challenges due to the escalating Russia-Ukraine conflict.

AUD/JPY extends its winning streak for the third successive session, trading around 101.20 during the Asian hours on Wednesday. This upside of the AUD/JPY cross is attributed to the tepid Japanese Yen (JPY) amid uncertainty surrounding the timing of the next interest rate hike by the Bank of Japan (BoJ).

On Tuesday, Japan’s Finance Minister Katsunobu Kato emphasized the need for stable currency behavior in line with economic fundamentals, expressing increased vigilance over foreign exchange movements. Kato reiterated that the ministry would take necessary actions to manage excessive forex fluctuations.

The Australian Dollar (AUD) remains stable following the interest rate decision by China, Australia's close trading partner. The People's Bank of China (PBoC) Monetary Policy Committee (MPC) decided to keep the benchmark interest rate unchanged at 3.1% for November.

Australian Treasurer Jim Chalmers stated that "tumbling iron ore prices and a softening labor market have impacted government revenue." following his Ministerial Statement on the economy on Wednesday. Chalmers outlined Australia's tough fiscal outlook, citing the weakening of China, a key trading partner, and the slowdown in the job market as contributing factors.

The upside of the AUD/JPY cross could be limited as the risk-sensitive AUD could have faced challenges as Ukraine deployed US-supplied ATACMS missiles to strike Russian territory for the first time, signaling a significant escalation on the 1,000th day of the conflict. However, market anxieties lessened somewhat when Russian Foreign Minister Sergei Lavrov reassured that the government would take all necessary measures to avert a nuclear war.

• AUD/JPY may appreciate as daily chart analysis indicates a potential shift in price momentum from bearish to bullish.
• A bullish reversal could be possible if the nine-day EMA breaks above the 14-day EMA.
• A break above nine- and 14-day EMAs could cause the emergence of a bullish bias.

The AUD/JPY cross remains relatively flat around 100.50 during the Asian trading session on Tuesday, following a nearly 1% gain in the previous session. An analysis of the daily chart suggests a potential shift in momentum from bearish to bullish as the pair seeks to break above the nine-day Exponential Moving Average (EMA).

Additionally, the nine-day EMA is currently just below the 14-day EMA. An upward crossover would signal a shift in the short-term price momentum from bearish to bullish, as it indicates that recent prices are gaining strength and pushing higher compared to the longer-term trend.

Additionally, the 14-day Relative Strength Index (RSI) is at the 50 level, signaling a neutral market condition. Any further movement in the AUD/JPY cross will likely determine the next clear directional trend.

To the upside, the AUD/JPY cross is testing immediate resistance at the nine-day EMA around the 100.58 level, followed by the 100.61 level. A break above these levels could trigger a bullish bias, potentially pushing the currency cross toward the four-month high of 102.41, reached on November 7.

On the downside, the primary support for the AUD/JPY cross is located around the recent low of 99.42. A break below this level would strengthen the bearish outlook and could drive the cross toward the psychological support level of 99.00.

AUD/JPY: Daily Chart

• AUD/JPY depreciated as BoJ Ueda reiterated that interest rate hikes would proceed gradually.
• BoJ Governor Ueda also emphasized the importance of carefully assessing the impact of FX movements.
• RBA Bullock stated that current interest rates will remain unchanged until the central bank is confident about the inflation outlook.

The AUD/JPY cross has trimmed its daily gains and trades near 99.90 during European trading hours on Monday. Meanwhile, the Japanese Yen (JPY) faced headwinds following remarks from Bank of Japan (BoJ) Governor Kazuo Ueda. Ueda reiterated that interest rate hikes would proceed gradually, contingent on the economy meeting expectations, but did not specify a timeline for future increases.

In a subsequent statement, Ueda emphasized the importance of carefully assessing the impact of foreign exchange (FX) movements on the economy, price forecasts, and associated risks at each policy meeting. He warned that failing to adjust monetary support appropriately could necessitate rapid rate hikes in the future. Ueda refrained from commenting on short-term FX fluctuations.

Japan's Finance Minister Katsunobu Kato issued a warning on Friday, stating that the government will closely monitor the foreign exchange (FX) market with heightened vigilance. Kato emphasized that appropriate measures would be taken to address any excessive movements in the currency.

The Australian Dollar (AUD) gained ground following hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock last Thursday. Bullock emphasized that current interest rates are sufficiently restrictive and will remain unchanged until the central bank is confident about the inflation outlook.

Recent data indicated a slowdown in employment growth for October, while the unemployment rate held steady, highlighting the resilience of the labor market. Market focus now shifts to the release of the latest RBA meeting minutes on Tuesday, which could offer further insights into the central bank's policy stance.

• AUD/JPY gains ground as Yen buyers adopt caution due to political instability in Japan.
• Japan’s Producer Price Index increased by 3.4% YoY in October and rose by 0.2% MoM.
• Australian PM Anthony Albanese shared about trade discussions with US President-elect Donald Trump during a phone call last week.

AUD/JPY extends its gains for the third successive day, trading around 101.20 during European hours on Wednesday. The rise in the AUD/JPY pair is largely due to the weakened Japanese Yen (JPY), fueled by growing doubts over future rate hikes by the Bank of Japan (BoJ). Japan’s fragile minority government is expected to complicate any plans for tightening monetary policy.

On the data front, the BoJ’s preliminary report on Wednesday showed that Japan’s Producer Price Index (PPI) increased by 3.4% year-over-year in October, exceeding expected 3.0% and previous 3.1% readings. Meanwhile, the PPI rose by 0.2% month-over-month, surpassing the expected flat growth for the month.

Meanwhile, the BoJ’s Summary of Opinions from its October meeting highlighted division among policymakers regarding additional rate hikes. Nevertheless, the central bank maintained its outlook, suggesting it could raise its benchmark rate to 1% by the second half of fiscal 2025, amounting to a total policy tightening of 75 basis points from the current rate.

The Australian Dollar (AUD) gained support after a radio interview with Australia's Prime Minister (PM), Anthony Albanese. Albanese said that he discussed trade relations with US President-elect Donald Trump during a phone call last week. He informed Trump that the US has a trade surplus with Australia and stressed that it’s in Washington’s best interest to maintain "fair trade" with its ally.

On Wednesday, Australia’s Wage Price Index showed a 3.5% year-over-year rise in the third quarter, down from the 4.1% growth seen in the previous quarter and slightly below the anticipated 3.6% increase. This represents the slowest wage growth since Q4 2022. Meanwhile, the quarterly index remained steady at 0.8% in Q3, just under the expected 0.9%.

• AUD/JPY depreciates as Japan's Finance Minister Katsunobu Kato cautions to take appropriate action to manage fluctuations in the FX market.
• The JPY may face challenges due to uncertainty around the BoJ rate hike plans.
• The AUD struggles as the Trump administration may impose immediate tariffs of 60% on imports from China.

AUD/JPY retraces its recent gains from the previous session, trading around 100.70 during the early European hours on Tuesday. This dip comes as the Japanese Yen (JPY) gains support following new verbal interventions from Japanese officials. Japanese Finance Minister Katsunobu Kato cautioned that authorities would take "appropriate action" to address sharp fluctuations in the foreign exchange market.

However, the Yen's upside potential remains limited due to uncertainty around the Bank of Japan's (BoJ) rate-hike plans. The presence of a fragile minority government in Japan is expected to complicate any moves toward monetary tightening. Additionally, the BoJ’s Summary of Opinions from its October meeting indicated a split among policymakers on whether to pursue further rate hikes.

Additionally, the Australian Dollar (AUD) faces downward pressure amid concerns about potential tariff increases on Chinese goods by US President-Elect Donald Trump, as China is one of Australia’s largest export markets. Additionally, China’s latest stimulus measures fell short of investor expectations, raising concerns over demand from Australia’s largest trading partner and further weighing on the AUD.

On a positive note, the Westpac Consumer Confidence index rose by 5.3% to 94.6 points in November, marking its second consecutive month of improvement and the highest level in two and a half years. However, the index has stayed below 100 for almost three years, indicating that pessimists still outnumber optimists.

The Australian Dollar's downside may be somewhat limited, as Reserve Bank of Australia (RBA) Governor Michele Bullock reaffirmed a hawkish stance after last week’s interest rate hold. Bullock emphasized the need for restrictive monetary policy in light of persistent inflationary pressures and a strong labor market.

• AUD/JPY gains ground due to uncertainties regarding the future BoJ interest rates outlook.
• BoJ's Summary of Opinions highlighted divisions among policymakers regarding the timing of future rate hikes.
• The Australian Dollar faced challenges as China's latest stimulus measures fell short of investors’ expectations.

AUD/JPY retraces its recent losses from the previous session, trading around 101.20 during early European hours on Monday. The upside of the AUD/JPY cross is attributed to lower Japanese Yen (JPY) following the release of the Bank of Japan's (BoJ) Summary of Opinions. The BoJ’s October report highlighted divisions among policymakers regarding the timing of future interest rate hikes.

Some members of the Bank of Japan expressed concerns about global economic uncertainties and rising market volatility, particularly around the Yen's depreciation. Still, the central bank has suggested it might increase its benchmark policy rate to 1% by the latter half of the 2025 fiscal year. 

In Japan, Prime Minister Shigeru Ishiba’s Cabinet resigned en masse before the Diet (parliament) during an extraordinary Cabinet meeting on Monday morning. With the ruling coalition of the Liberal Democratic Party (LDP) and Komeito now holding less than a majority in the House of Representatives, Monday’s vote is expected to lead to a runoff between Ishiba and Yoshihiko Noda, the leader of the major opposition party, the Constitutional Democratic Party.

The Australian Dollar (AUD) edged higher despite a generally cautious outlook due to concerns over Donald Trump’s proposed tariff increases on Chinese goods, which could impact Australian markets as China is one of its largest trading partners. 

Further weighing on the Australian Dollar were China’s latest stimulus measures, which fell short of investor expectations and dampened demand prospects for Australia’s top trading partner. On Friday, China announced a 10 trillion Yuan debt package aimed at easing local government financing pressures and supporting sluggish economic growth; however, the package stopped short of including direct economic stimulus initiatives.

• AUD/JPY depreciates due to fears over Trump’s tariffs on Chinese goods.
• The Aussie Dollar may regain its ground due to the hawkish mood surrounding the RBA.
• Japan’s Finance Minister Katsunobu Kato said to closely monitor the impact of Trump’s policies on Japan's economy.

AUD/JPY retraces its recent gains from the previous session, trading around 101.60 during the early European hours on Friday. The Australian Dollar (AUD) lost ground due to concerns about Donald Trump’s proposals to raise tariffs on Chinese goods, given that Australia is one of the largest exporters to China.

However, the downside of the Aussie Dollar could be limited due to hawkish sentiment surrounding the Reserve Bank of Australia (RBA). RBA Governor Michele Bullock emphasized the need for restrictive monetary policy given persistent inflation risks and a strong labor market on Tuesday following the central bank’s decision to hold the Official Cash Rate (OCR) steady at 4.35%, marking its eighth consecutive pause.

The downside of the AUD/JPY cross could be attributed to some verbal intervention from Japanese authorities. Japan’s Finance Minister Katsunobu Kato stated on Friday that he will "closely monitor the impact of Trump’s policies on Japan's economy." Kato emphasized the importance of currencies moving in a stable manner that reflects economic fundamentals and affirmed that appropriate measures would be taken in response to excessive fluctuations.

Japan's real wages and household spending both declined for the second consecutive month in September, which could dampen inflation expectations and delay the Bank of Japan's (BoJ) plans for a rate hike. Combined with Japan's political landscape and prevailing risk-on sentiment, this is likely to limit gains for the safe-haven Yen.

• AUD/JPY jumps to around 102.05 in Thursday’s Asian session, up 0.49% on the day. 
• Risk-on sentiment, the BoJ rate-hike uncertainty weigh on the Japanese Yen.
• The encouraging Chinese economic data support the China-proxy Australian Dollar. 

The AUD/JPY cross extends its upside to near 102.05 on Thursday during the Asian trading hours. The risk-on mood and the uncertainty surrounding the Bank of Japan's (BoJ) rate hike exert some selling pressure on the Japanese Yen (JPY). 

The victory of Republican Donald Trump in the US presidential election drags the JPY lower. Additionally, the minutes released by the BoJ on Wednesday showed that the Japanese central bank would not raise its policy interest rate under financial and capital market instability. 

"In the current phase, the BoJ should patiently maintain the current accommodative financial conditions to support economic activity," another Policy Board member said. The BoJ rate-hike uncertainty is likely to undermine the JPY in the near term. 

Nonetheless, the downside for the JPY might be capped after the verbal intervention from the Japanese authorities. Japan's top currency diplomat Atsushi Mimura said on Thursday that authorities were ready to act against "excessive" currency moves.

On the other hand, China’s Trade Balance grew more than expected in October as Exports rose, boosting the China-proxy Australian Dollar (AUD). The Trade Balance grew to $95.27 billion in October versus $81.71 billion prior, higher than expectations of $75.1 billion. Meanwhile, Exports climbed by 12.7% YoY in October, compared to 2.4% in the previous reading. The figure was above the market consensus of 5.0%. 

• AUD/JPY climbs to over a one-week low, albeit struggles to capitalize on the move. 
• The BoJ rate hike uncertainty, the risk-on mood weigh on the JPY and lend support.
• The RBA’s hawkish stance and the optimism over Chinese recovery benefit the AUD.

The AUD/JPY cross attracts follow-through buying for the second successive day on Wednesday and climbs to over a one-week high during the Asian session. Spot prices, however, struggle to build on the momentum beyond the 101.00 round figure and retreat to the lower end of the daily range, closer to a technically significant 200-day Simple Moving Average (SMA) in the last hour.

The Japanese Yen (JPY) continues with its relative underperformance in the wake of expectations that Japan's political landscape could make it difficult for the Bank of Japan (BoJ) to hike interest rates further. Apart from this, the risk-on impulse, triggered by the US election results indicating an early lead for former President Donald Trump, weighs heavily on the safe-haven JPY and provides an intraday boost to the AUD/JPY cross.

Meanwhile, Chinese PMIs released recently suggested that the big government stimulus push to bring growth back on track is helping improve business conditions. This, along with the Reserve Bank of Australia's (RBA) hawkish stance, offered additional support to the AUD/JPY cross. That said, BoJ meeting minutes left the door open for further policy tightening and cap any further appreciating move for the currency pair. 

From a technical perspective, the recent range-bound price action witnessed over the past month or so points to indecision among traders over the next leg of a directional move. This, along with the aforementioned mixed fundamental backdrop, makes it prudent to wait for strong follow-through buying before positioning for the resumption of the AUD/JPY pair's strong move-up from the September monthly swing low.

• AUD/JPY trades in positive territory in Tuesday’s Asian session, up 0.22% on the day. 
• The RBA decided to keep the OCR on hold at 4.35% at its November meeting on Tuesday. 
• The US presidential election uncertainty might cap the upside for the cross. 

The AUD/JPY cross gains traction to near 100.40 during the Asian trading hours on Tuesday. The Australian Dollar (AUD) edges higher after the Reserve Bank of Australia (RBA) interest rate decision. 

The RBA kept the Official Cash Rate (OCR) on hold at 4.35% following the conclusion of its November policy meeting. The decision came in line with market expectations. The Aussie remains firm following the RBA rate decision. 

According to the RBA Monetary Policy Statement, the board members will continue to rely upon the upcoming data and the evolving assessment of risks. The policymaker further stated that the monetary policy will need to be sufficiently restrictive until the central bank is confident that inflation is moving sustainably toward the target range. 

Traders will take more cues from the RBA’s updated economic forecasts and Governor Michele Bullock’s press conference, which might offer some insight into the interest rate outlook. 

On the other hand, the uncertainty surrounding the US presidential election could boost the safe-haven currency like the Japanese Yen (JPY) and cap the upside for the cross. Additionally, less dovish remarks from BoJ Governor Kazuo Ueda could underpin the JPY in the near term. "Many market players had bet that the next rate hike will come in the January-March quarter next year. But he sounded as if he left open the chance of a December hike," said Hiroshi Watanabe, senior economist at Sony Financial Group.

• AUD/JPY remains steady as the Australian Dollar receives support from the hawkish mood surrounding the RBA.
• The Reserve Bank of Australia is widely anticipated to maintain the cash rate at 4.35% on Tuesday.
• The Japanese Yen may depreciate due to rising political and monetary policy uncertainties.

AUD/JPY extends its gains for the second consecutive day, trading around 100.40 during the early European hours on Monday. The Australian Dollar (AUD) receives support as the Reserve Bank of Australia (RBA) is expected to maintain the cash rate at 4.35% during Tuesday’s policy meeting, as underlying inflation, reflected in the trimmed mean, remains high. This anticipated hawkish stance from the RBA continues to support the Aussie Dollar, bolstering the AUD/JPY cross.

Additionally, the release of the Melbourne Institute’s Inflation Gauge data might have contributed support for the Australian Dollar. The TD-MI Inflation Gauge rose by 0.3% month-over-month in October, up from a 0.1% increase in the prior month, marking the highest reading since July and preceding the RBA's November policy meeting. Annually, the gauge climbed by 3.0%, compared to the previous 2.6% reading.

In China, the Standing Committee of the National People's Congress is meeting from November 4 to 8, during which it is expected to approve additional stimulus measures aimed at bolstering the slowing economy. Any additional measures taken could have a positive impact on Australian markets as both countries are close trade partners.

On Sunday, China’s Commerce Minister Wang Wentao met with Australia’s Trade Minister Don Farrell. China expressed hopes that Australia will continue enhancing its business environment and ensure fair and equitable treatment for Chinese companies.

Japanese markets are closed for the Sports Day holiday, halting physical trading of US Treasuries and slightly limiting JPY liquidity. The Japanese Yen may face weakness as political and monetary policy uncertainties rise, following last week’s parliamentary majority win by the Liberal Democratic Party (LDP) coalition, which has led to questions about the Bank of Japan’s (BOJ) future policy stance.

In a briefing last Thursday, BoJ Governor Kazuo Ueda noted that economic risks in the US appear to be easing, potentially opening the door for a future rate hike. Meanwhile, as expected, the Bank of Japan maintained its policy rate at 0.25%.

• AUD/JPY may regain its ground as the RBA is widely expected to maintain a hawkish policy outlook.
• China’s Caixin Manufacturing PMI increased to 50.3 in October, from September’s 49.3.
• The au Jibun Bank Japan Manufacturing PMI declined to 49.2 in October, from 49.7 in September.

The AUD/JPY pair remains subdued for the second day, hovering around 100.00 during the European session after the release of mixed Q3 Producer Price Index (PPI) data on Friday. Despite this, expectations for a hawkish approach from the Reserve Bank of Australia (RBA) could have supported the Australian Dollar, helping limit losses in the AUD/JPY cross.

Australia’s Producer Price Index rose 0.9% quarter-on-quarter in Q3, following a 1.0% increase in the previous period and surpassing forecasts of a 0.7% rise, marking the 17th consecutive period of producer inflation. On an annual basis, PPI growth slowed to 3.9% in Q3, down from a 4.8% increase in the prior quarter.

China's Caixin Manufacturing Purchasing Managers Index (PMI) rose to 50.3 in October, up from 49.3 in September, exceeding market expectations of 49.7. Given China's role as a major trading partner for Australia, economic shifts in China could have a substantial impact on Australian markets.

In Japan, the headline au Jibun Bank Japan Manufacturing PMI stood at 49.2 in October, indicating a decline from 49.7 in September. This composite single-figure indicator shows that Japanese manufacturing production continued to decline at the beginning of the fourth quarter of 2024, with both output and new order inflows decreasing at more pronounced rates.

On Thursday, the Japanese Yen (JPY) strengthened following comments from Bank of Japan (BoJ) Governor Kazuo Ueda, which were interpreted as raising the likelihood of a rate hike in December. The central bank intends to continue adjusting policy rates as long as economic conditions and inflation align with its forecasts. The BoJ's policy remains focused on sustainably and stably achieving its 2% inflation target.

Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated on Friday that he expects the Bank of Japan to work closely with the government to implement effective monetary policy, targeting stable and sustainable achievement of its price goals.

• AUD/JPY experienced a decline following the Bank of Japan's decision to keep its short-term interest rate unchanged at 0.25%.
• BoJ Outlook Report for Q3 indicated to keep raising policy rates, provided the economy and prices align with its forecasts.
• Australia’s Retail Sales increased by 0.1% MoM in September, against the expected 0.3% and previous 0.7% growth.

AUD/JPY retraces its recent gains from the previous session, trading around 100.50 during Thursday's Asian hours. The decline in the AUD/JPY cross comes as the Japanese Yen (JPY) strengthens following the Bank of Japan's (BoJ) policy announcement. The BoJ opted to maintain its short-term interest rate target at 0.25% after concluding its two-day monetary policy review, a decision that aligned with market expectations for stability.

According to the BoJ Outlook Report for Q3, the central bank plans to continue raising policy rates as long as the economy and prices align with its forecasts, particularly given that real interest rates are currently very low. The Bank of Japan aims to conduct monetary policy with a focus on sustainably and stably achieving its 2% inflation target.

However, there are expectations that Japan's political landscape could necessitate expansionary fiscal policies, complicating the BoJ's ability to raise interest rates further. Concerns about potential government intervention, coupled with cautious market sentiment, are providing some support to the safe-haven Japanese Yen. Investors are now awaiting the post-meeting press conference, where comments from BoJ Governor Kazuo Ueda are anticipated.

On the AUD’s front, the seasonally adjusted Australian Retail Sales rose by 0.1% month-over-month in September, falling short of the expected 0.3% and significantly down from the 0.7% growth seen in the previous month. On a quarterly basis, Retail Sales increased by 0.5% in Q3, rebounding from a 0.3% decline in the prior quarter.

In addition, China's NBS Non-Manufacturing PMI increased to 50.2 in October, up from 50.0 in the previous month, although it fell short of market expectations of 50.4. Meanwhile, the NBS Manufacturing PMI rose to 50.1, surpassing the previous reading of 49.8 and slightly exceeding the forecast of 50.0. Given the close trade relationship between China and Australia, any shifts in the Chinese economy could significantly impact the Australian market.

• AUD/JPY loses ground after the release of lower-than-expected Australia's third-quarter inflation data.
• The monthly Australian CPI rose by 2.1% YoY in September, against the expected 2.3% and previous 2.7% readings.
• The Japanese Yen may struggle due to increased uncertainty surrounding the BoJ rate-hike intentions, following LDP coalition loss.

AUD/JPY extends its losses for the second successive session, trading around 100.50 during the early European hours on Wednesday. This downside of the AUD/JPY cross is attributed to the weaker Australian Dollar (AUD) following lower-than-expected Australia's third-quarter Consumer Price Index (CPI) data.

The Australian Bureau of Statistics reported that the Consumer Price Index (CPI) rose just 0.2% quarter-over-quarter in the third quarter, down from 1.0% in the previous quarter and slightly below the anticipated 0.3%. The monthly CPI rose by 2.1% year-over-year in September, coming in below market expectations of 2.3% and down from August's reading of 2.7%.

However, the downside of the AUD could be restrained due to the hawkish sentiment surrounding the Reserve Bank of Australia's (RBA) regarding its policy outlook. The Reserve Bank of Australia signaled that the current cash rate of 4.35% is sufficiently restrictive to guide inflation back to the target range of 2%-3% while continuing to support employment. As a result, a rate cut in November appears unlikely.

The Japanese Yen (JPY) may encounter pressure due to ongoing uncertainty surrounding the Bank of Japan’s (BoJ) rate-hike intentions, especially after the ruling Liberal Democratic Party (LDP) coalition lost its parliamentary majority in Sunday’s election.

Japan’s Economy Minister Ryosei Akazawa remarked on Tuesday that a weaker Yen could drive up prices via higher import costs, potentially reducing real household income and dampening private consumption if wage growth does not keep pace.

The Bank of Japan’s interest rate decision, scheduled for Thursday, remains a focal point, with nearly 86% of economists surveyed by Reuters anticipating that the central bank will hold rates steady at its October meeting.

• AUD/JPY loses ground despite a hawkish sentiment surrounding the RBA regarding its policy outlook.
• The Australian Dollar may limit its downside as an RBA rate cut is unlikely in the near term.
• The Japanese Yen may depreciate as the loss of the LDP coalition has increased uncertainty regarding the BoJ rate-hike plans.

AUD/JPY retraces its recent gains from the previous session, trading around 100.50 during the early European hours on Tuesday. The downside of the AUD/JPY cross could be limited due to the Reserve Bank of Australia's (RBA) hawkish stance on its policy outlook.

The Reserve Bank of Australia has indicated that the current cash rate of 4.35% is restrictive enough to steer inflation back within the target range of 2%-3% while still supporting employment. Consequently, a rate cut is unlikely in the near term, especially as early as next month.

Traders are now focused on Australia’s third-quarter Consumer Price Index (CPI) data, due for release on Wednesday, as they seek further insights into the RBA’s potential monetary policy direction.

On the JPY’s front, Japan’s Liberal Democratic Party (LDP)-coalition lost its parliamentary majority in Sunday's election, which has increased uncertainty regarding the Bank of Japan's (BoJ) rate-hike plans, which puts downward pressure on the Japanese Yen (JPY).

The Bank of Japan’s interest rate decision is set to be the focal point on Thursday, with nearly 86% of economists surveyed by Reuters expecting the central bank to maintain its current rates at the October meeting.

On Tuesday, Japan’s Finance Minister Katsunobu Kato stated that he is “closely watching FX movements, including those driven by speculators, with heightened vigilance,” but refrained from commenting on specific forex levels. Kato emphasized the importance of stable currency movements that reflect economic fundamentals.

• AUD/JPY strengthens due to increased uncertainty over the BoJ rate-hike plans.
• The LDP coalition secured only 215 of the 465 lower house seats, missing the 233-seat majority threshold.
• The Australian Dollar gains support due to the hawkish mood surrounding the Reserve Bank of Australia.

The AUD/JPY pair recovers its recent losses seen over the past two sessions, trading around 101.20 during early European hours on Monday. The upward movement in AUD/JPY could be linked to growing uncertainty surrounding the Bank of Japan's (BoJ) rate-hike plans, now compounded by Japan’s ruling coalition losing its parliamentary majority.

In Sunday's election, Japan's long-standing ruling coalition lost its majority in the lower house for the first time since 2009, casting doubt on the BoJ's capacity to proceed with further rate hikes. The Liberal Democratic Party and its coalition partner, Komeito, secured only 215 of the 465 lower house seats, missing the 233-seat majority threshold. Meanwhile, the main opposition, the Constitutional Democratic Party of Japan (CDPJ), gained 148 seats, up from 98.

The Australian Dollar (AUD) finds support following hawkish remarks from the Reserve Bank of Australia (RBA). The RBA emphasized that the current cash rate of 4.35% is sufficiently restrictive to bring inflation within its 2%-3% target range while sustaining employment levels, making an imminent rate cut unlikely.

Last week, RBA Deputy Governor Andrew Hauser underscored Australia’s robust labor participation rate and clarified that, while the RBA is data-dependent, it avoids over-reliance on specific figures. Traders remain cautious as they await key domestic inflation data due on Wednesday, which could influence the RBA’s future monetary policy stance.

• The AUD/JPY cross could recover as traders anticipate that the RBA may avoid implementing rate cuts in 2024.
• Japan’s polls indicate the LDP-led coalition may lose its majority in the general election this weekend.
• Australia's Judo Bank Services PMI inched up to 50.6 in October, marking its ninth consecutive month of expansion.

AUD/JPY breaks its three-day winning streak, trading around 101.20 during the European hours on Thursday. The Japanese yen (JPY) gained some traction as buyers might have responded to verbal intervention from Japanese officials earlier in the day.

However, the upside of the Japanese Yen could be limited due to growing concerns over political instability, which further clouds the outlook for the Bank of Japan's (BoJ) monetary policy. In Japan, recent polls indicate the ruling coalition led by the Liberal Democratic Party (LDP) may lose its majority in the general election this weekend.

Japan's Finance Minister, Katsunobu Kato, voiced concern over the rapid and one-sided movements in the currency market, emphasizing the importance of stable currency movements that align with economic fundamentals, per Reuters.

Additionally, on Thursday, Japan's Deputy Chief Cabinet Secretary, Kazuhiko Aoki, stated that the government is closely monitoring foreign exchange fluctuations, including speculative activities, with a sense of urgency.

The downside of the AUD/JPY cross could be limited as the Australian Dollar (AUD) receives support from the prevailing hawkish sentiment surrounding the Reserve Bank of Australia (RBA), bolstered by the positive employment data. Earlier this week, RBA Deputy Governor Andrew Hauser noted that the labor participation rate is remarkably high and emphasized that while the RBA is data-dependent, it is not data-obsessed.

On the data front, Australia's Judo Bank Composite PMI slightly rose to 49.8 in October, up from 49.6 in September, signaling a second straight month of contraction in private sector output. The Services PMI inched up to 50.6 from 50.5, marking its ninth consecutive month of expansion, while the Manufacturing PMI dipped to 46.6 from 46.7, continuing its decline.

• AUD/JPY continues to rise amid Japan's political instability, which casts uncertainty over the Bank of Japan's policy direction.
• Recent polls show that Japan's Liberal Democratic Party-led coalition may lose its majority in Parliament.
• The Australian Dollar gained ground due to the rising hawkish mood surrounding the RBA.

AUD/JPY extends its gains for the third consecutive day, trading near 101.60 during European hours on Wednesday. The Japanese Yen (JPY) is under heavy selling pressure due to growing concerns over political instability, which further clouds the outlook for the Bank of Japan's (BoJ) monetary policy.

In Japan, recent polls indicate the ruling coalition led by the Liberal Democratic Party (LDP) may lose its majority in the general election this weekend, which could jeopardize Prime Minister Shigeru Ishiba's position or push the party to seek an additional coalition partner to remain in power, per Reuters.

In its October World Economic Outlook (WEO) report, the IMF downgraded Japan's economic growth forecast to 0.3% for this year, down from 1.7% in 2023. The projection was revised downward by 0.4% compared to the July outlook. Looking ahead, the IMF expects the economy to grow by 1.1% in 2025, driven by stronger private consumption as real wage growth picks up.

Furthermore, traders will likely observe the speech of the Bank of Japan Governor Kazuo Ueda at the IMF-hosted "Governors Talk" session scheduled later in the North American session.

The Australian Dollar (AUD) receives support as upbeat employment data has strengthened the hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Further support for the Aussie Dollar came from China's recent rate cuts, as China remains Australia's largest trading partner.

On Monday, RBA Deputy Governor Andrew Hauser expressed some surprise at the robust employment growth. He pointed out that the labor participation rate is notably high and clarified that while the RBA relies on data for its decisions, it is not overly fixated on it.

• AUD/JPY extends its gains as traders expect the RBA to maintain current interest rates in 2024.
• The Australian Dollar gains support as China's recent rate cuts may boost demand for Australian exports.
• The subdued Japanese Yen could heighten market concerns, possibly leading to another intervention by Japanese authorities.

AUD/JPY continues to gain ground for the second successive session, hovering around 100.90 during the European trading hours on Tuesday. The Australian Dollar (AUD) receives support from hawkish sentiment surrounding the Reserve Bank of Australia (RBA) regarding its policy outlook, bolstered by positive employment data released last week.

The Employment Change surged by 64.1K in September, bringing the total employment to a record 14.52 million. This far surpassed market expectations of a 25.0K increase, following a revised rise of 42.6K in the previous month.

Additionally, the AUD found support from China's recent rate cuts, given that China remains Australia’s largest trading partner. The People's Bank of China (PBoC) reduced the 1-year Loan Prime Rate (LPR) to 3.10% from 3.35% and the 5-year LPR to 3.60% from 3.85%, in line with expectations. Lower borrowing costs are anticipated to stimulate China's domestic economic activity, potentially increasing demand for Australian exports.

The weakening Japanese Yen (JPY) may fuel market fears, potentially triggering another intervention by Japanese authorities. However, Japan's Deputy Chief Cabinet Secretary, Kazuhiko Aoki, declined to comment on currency movements on Tuesday. Meanwhile, Chief Cabinet Secretary Yoshimasa Hayashi acknowledged both the positive and negative aspects of the Yen’s fluctuations.

Bank of Japan (BoJ) Executive Director Takashi Kato stated that the BoJ is not targeting specific FX levels but is closely monitoring upside risks from rising import costs. Kato also emphasized the need to carefully assess the US economy, upcoming elections, and Federal Reserve policy.