CFD Trading Rate Australian Dollar vs Japanese Yen (AUDJPY)

• AUD/JPY draws support from a combination of factors and moves back closer to a two-month top.
• Ishiba's comments about BoJ rate hikes overshadow upbeat domestic data and undermine the JPY.
• The stronger Australian Retail Sales data boosts the Aussie amid optimism over Chinese stimulus.

The AUD/JPY cross attracts buyers for the second straight day on Tuesday and climbs to the 99.75-99.80 region during the Asian session, closer to a technically significant 200-day Simple Moving Average (SMA). 

The Japanese Yen (JPY) continues to be undermined by comments from Japan's incoming Prime Minister (PM) Shigeru Ishiba, saying that the Bank of Japan's (BoJ) monetary policy must remain accommodative to underpin a fragile economic recovery. Furthermore, Ishiba said on Monday that he intends to call a general election on October 27, which overshadows mostly upbeat Japanese macro data and does little to provide any meaningful impetus to the JPY. 

A government report published earlier today showed that Japan's Unemployment rate dropped to 2.5% in August from the 2.7% previous. Separately, a BoJ's Tankan survey indicated that sentiment among Japan's big manufacturers was steady and slight improvement in large non-manufacturers' mood during the third quarter. Meanwhile, BoJ's Summary of Opinions revealed that the central bank will adjust its accommodative stance if economic conditions improve.

The Australian Dollar (AUD), on the other hand, strengthened a bit following the release of domestic Retail Sales, which rose 0.7% in August as compared to a modest 0.1% increase in the previous month. This comes on top of the Reserve Bank of Australia's (RBA) hawkish stance and the optimism over a slew of stimulus measures from China last week, which continues to benefit the Aussie and turns out to be a key factor acting as a tailwind for the AUD/JPY cross.

It, however, remains to be seen if bulls can build on the momentum or once again face rejection near the 100.00 psychological mark amid the growing market conviction that the BoJ will hike interest rates again by the end of this year. Furthermore, the formation of a 'Death Cross' on the daily chart –  the 50-day Simple Moving Average (SMA) crossing below the 200-day SMA – warrants caution before placing bullish bets around the AUD/JPY cross and positioning for further gains.

• AUD/JPY receives support from the hawkish sentiment surrounding the RBA’s policy outlook.
• The risk-sensitive AUD appreciates due to improved market sentiment amid dovish sentiment surrounding the Fed's interest rates trajectory.
• The Japanese Yen struggles as upcoming PM Shigeru Ishiba says that the monetary policy should continue to be accommodative.

AUD/JPY gains ground, trading around 98.70 during the European session on Monday. This upside of the AUD/JPY cross is attributed to the Reserve Bank of Australia’s (RBA) hawkish stance contributing support to the Australian Dollar (AUD). The RBA kept its cash rate at 4.35% for a seventh consecutive meeting and stated that the policy would need to stay restrictive to ensure inflation slowed.

The AUD remains stronger despite the mixed Manufacturing Purchasing Managers’ Index (PMI) data from China, Australia’s largest trading partner. China's Caixin Manufacturing PMI fell to 49.3 in September, indicating contraction, down from 50.4 in August. Meanwhile, China’s NBS Manufacturing PMI improved to 49.8, up from 49.1 in the previous month and surpassing the market consensus of 49.5.

Additionally, the rising expectations that the US Federal Reserve (Fed) may continue its policy easing in November is improving the market sentiment and contributing support for the risk-sensitive Australian Dollar. The CME FedWatch Tool indicates that markets are assigning a 55.9% probability to a 25 basis point rate cut by the Federal Reserve in November.

The Japanese Yen (JPY) receives downward pressure due to the dovish comments from Japan's upcoming Prime Minister, former Defense Chief Shigeru Ishiba. Ishiba stated on Sunday that the country's monetary policy should continue to be accommodative, indicating the necessity of maintaining low borrowing costs to support a fragile economic recovery, according to The Japan Times.

On Monday, Japan's Retail Trade increased by 2.8% year-on-year in August, surpassing market expectations of 2.3% and slightly exceeding the upwardly revised 2.7% rise from the previous month. On a month-over-month basis, seasonally adjusted Retail Trade rose by 0.8%, marking the largest increase in three months, following a 0.2% gain in July.

Japan's Chief Cabinet Secretary, Yoshimasa Hayashi, refrained from commenting on Monday's daily stock market fluctuations. Hayashi emphasized the importance of closely monitoring the economic and financial situation both domestically and internationally with a sense of urgency. He also noted the need for ongoing collaboration with the Bank of Japan.

• AUD/JPY loses ground as Shigeru Ishiba has won the leadership race to become Japan’s prime minister.
• The Tokyo Consumer Price Index rose 2.2% YoY in September, down from a 2.6% increase in August.
• Australian Treasurer Jim Chalmers views China's new stimulus measures as a "really welcome development."

AUD/JPY breaks its winning streak that began on September 16, trading around 98.60 during the early European session on Friday. The Japanese Yen (JPY) gains ground as former Defense Chief Shigeru Ishiba won the Liberal Democratic Party's (LDP) presidential election to become Japan's prime minister. However, the JPY received downward pressure due to the rising concerns over the Bank of Japan’s (BoJ) interest rates outlook.

On Friday, The Tokyo Consumer Price Index (CPI) increased 2.2% year-over-year in September, down from a 2.6% rise in August. Meanwhile, the CPI excluding fresh food and energy climbed 1.6% YoY in September, unchanged from the previous reading. The CPI excluding fresh food increased 2.0% as expected, compared to the previous rise of 2.4%.

The AUD/JPY cross may receive upward support following the news of further stimulus from China, its largest trading partner, along with the dovish Federal Reserve’s (Fed) policy outlook, which lifted market sentiment for riskier currencies like the Australian Dollar (AUD).

Australian Treasurer Jim Chalmers is currently in China to strengthen economic ties between the two nations. During his visit, Chalmers held candid and productive discussions with the National Development and Reform Commission (NDRC). He highlighted China's economic slowdown as a key factor in weaker global growth while welcoming the country's new stimulus measures as a "really welcome development."

• AUD/JPY remains firms on multiple tailwinds.
• The RBA left its key interest rates steady at 4.35% on Tuesday.
• Investors await Japan’s Tokyo CPI data for fresh BoJ’s interest rate outlook.

The AUD/JPY pair rises further to near 99.60 in Thursday’s European session. The cross extends its winning spell for the ninth trading day on Thursday as the Australian Dollar (AUD) performs strongly on multiple tailwinds such as: Reserve Bank of Australia’s (RBA) hawkish interest rate outlook and China’s larger-than-expected monetary stimulus.

After leaving the Official Cash Rate (OCR) unchanged at 4.35% on Tuesday, the comments from the RBA indicated that it is unlikely to start reducing interest rates this year due to sticky price pressures and upbeat labor market health.

In addition to the RBA’s hawkish guidance, the announcement of a slew of stimulus packages by China has also strengthened the AUD’s outlook. It is worth noting that the Australia is the leading trading partner of China and an attempt to revive the Chinese economy will have a positive impact on the Australian Dollar.

Meanwhile, the Japanese Yen (JPY) will be guided by the Tokyo Consumer Price Index (CPI) data for August, which will be published on Friday. The Tokyo CPI excluding Fresh Food is estimated to have grown by 2%, slower than 2.4% in July. This would dampen market expectations for the Bank of Japan (BoJ) to hike interest rates further.

AUD/JPY gathers strength to break above the horizontal resistance plotted from September 2 high of 99.87 on a daily timeframe. Given a nine-day winning spree, the risk-barometer would thrash the immediate resistance. Upward-sloping 20-day Exponential Moving Average (EMA) near 97.40 suggests that the near-term trend is bullish.

The 14-day Relative Strength Index (RSI) has climbed above 60.00. A bullish momentum would trigger if the oscillator sustains above the same.

Going forward, a decisive break above September 2 high of 99.87 will result in further upside in the asset towards the psychological resistance of 100.00 and July 30 high of 101.78.

On the flip side, a downside move below September 25 low of 98.50 would drag the asset towards the 20-day EMA, which is currently trading around 97.40, followed by September 12 high near 95.70.

AUD/JPY daily chart

• AUD/JPY steadily moves back closer to a multi-week high touched on Wednesday.
• The RBA’s hawkish stance and a positive risk tone continue to benefit the Aussie.
• Bets for another BoJ rate hike in 2024 should limit the JPY losses and cap the cross.

The AUD/JPY cross attracts some dip-buying during the Asian session on Thursday and jumps back above the 99.00 mark in the last hour, though remains below over a three-week top touched the previous day. 

The Australian Dollar (AUD) continues to draw support from a more hawkish stance adopted by the Reserve Bank of Australia (RBA). In fact, the Australian central bank reiterated on Tuesday that policy will need to be restrictive until confidence returns that inflation is moving sustainably towards the target range. Adding to this, RBA Governor Michele Bullock stated that the recent data has not significantly influenced the policy outlook. 

Moreover, the latest consumer inflation figures released on Wednesday showed that the core CPI remains above the RBA's 2-3% target band and is not enough to justify rate cuts in the near term. Meanwhile, the RBA's semi-annual Financial Stability Review (FSR) revealed that the risk of widespread financial stress remains limited. Furthermore, a positive risk tone undermines the safe-haven Japanese Yen (JPY) and benefits the risk-sensitive Aussie. 

That said, growing acceptance that the Bank of Japan (BoJ) will hike interest rates again by the end of this year should help limit deeper JPY losses and keep a lid on the AUD/JPY cross. The bets were reaffirmed by the BoJ meeting minutes released earlier today, which showed that board members shared a view over the need for vigilance to the risk of inflation overshoot and that it was appropriate to adjust the degree of monetary support moderately.

Even from a technical perspective, the formation of a 'Death Cross' on the daily chart – with the 50-day Simple Moving Average (SMA) crossing below the very important 200-day SMA – warrants some caution for bullish traders. Hence, any subsequent move up is more likely to confront stiff resistance and remain capped near the 100.00 psychological mark, or the 200-day SMA, which should now act as a key pivotal point for the AUD/JPY cross.

• AUD/JPY attracts some follow-through buyers and reacts little to Australian inflation figures.
• The headline CPI eased to 2.7% YoY in August, while the core CPI remains above the RBA’s target.
• Bets for another BoJ rate hike in 2024 to limit the JPY losses and keep a lid on the currency pair.

The AUD/JPY cross trades with a positive bias during the Asian session on Wednesday and is currently placed just below the 99.00 mark, or over a three-week top touched the previous day. The mixed fundamental backdrop, meanwhile, warrants some caution for bullish traders and before positioning for an extension of the recent upward trajectory witnessed over the past two weeks or so. 

Against the backdrop of bets for a more aggressive policy easing by the Federal Reserve (Fed), China's new stimulus measures to support the faltering economy boost investors' appetite for riskier assets. This is evident from the prevalent upbeat mood across the global equity markets, which is seen undermining the safe-haven Japanese Yen (JPY) and benefiting the risk-sensitive Aussie. Apart from this, the Reserve Bank of Australia's (RBA) hawkish stance acts as a tailwind for the AUD/JPY cross. 

The Australian central bank reiterated on Tuesday that policy will need to be restrictive until confidence returns that inflation is moving sustainably towards the target range. Adding to this, RBA Governor Michele Bullock stated that the recent data has not significantly influenced the policy outlook. That said, official data released earlier today showed that Australian Consumer Price Inflation (CPI) dropped in August, to its lowest level since early 2022 due to state government rebates. 

In fact, the Australian Bureau of Statistics reported that the headline CPI rose at an annual pace of 2.7% in August, down sharply from 3.5% in July. Meanwhile, core CPI decelerated to the 3.4% YoY rate from 3.8%, though remains above the RBA's 2-3% target band and is not enough to justify rate cuts in the near term. However, expectations that the Bank of Japan (BoJ) will hike interest rates again by the end of this year limit the JPY losses and should cap any further gains for the AUD/JPY cross. 

Investors now look forward to the release of BoJ meeting minutes on Thursday, which, along with the broader risk sentiment, will drive the JPY demand and provide a fresh impetus to the AUD/JPY cross. From a technical perspective, a sustained move above the 50-day Simple Moving Average (SMA) could be seen as a fresh trigger for bullish traders. That said, any subsequent move up is likely to remain capped near the 100.00 psychological mark, representing the 200-day SMA.

• AUD/JPY attracts some follow-through buying on Tuesday and reacts little to the RBA decision.
• The RBA decided to leave its benchmark interest rates unchanged and stick to its hawkish stance.
• Bets for another BoJ rate hike in 2024 limit the JPY losses and might cap the upside for the cross.

The AUD/JPY cross trades with a mild positive bias during the Asian session on Tuesday and climbs to a three-week top, around the 98.75-98.80 region after the Reserve Bank of Australia (RBA) announced its policy decision. Spot prices now look to build on the recent move up beyond the 50-day Simple Moving Average (SMA). 

As was widely expected, the Australian central bank decided to stand pat for the seventh straight meeting and hold the Official Cash Rate (OCR) steady at 4.35% at its September policy meeting. In the accompanying policy statement, the RBA stuck to its hawkish stance and reiterated that policy will need to be sufficiently restrictive until confidence returns that inflation is moving sustainably towards the target range. This, along with a surprise move by the People's Bank of China (PBOC) on Monday, to lower its 14-day repo rate by 10 basis points to stimulate the economic recovery, continues to underpin the Australian Dollar (AUD) and lend support to the AUD/JPY cross. 

Meanwhile, the underlying bullish sentiment across the global financial markets is seen undermining the safe-haven Japanese Yen (JPY) and turning out to be another factor acting as a tailwind for spot prices. That said, growing acceptance that the Bank of Japan (BoJ) will raise interest rates again by the end of this year, bolstered by last week's data showing that Japan's core inflation rose for the fourth consecutive month, should help limit the JPY losses. Apart from this, persistent geopolitical risk might further contribute to capping gains for the AUD/JPY cross.