AUD/JPY conversion rate may have a bull run

AUD/JPY Sees Volatility, Trades Above 104.00

Key Points:

  • AUD/JPY pair showed volatility, bouncing between 103.60-103.55, but traded defensively above 104.00.
  • The RBA kept the cash rate at 4.35%, signalling concern over inflation and possible future hikes.
  • China’s uncertain recovery impacts AUD/JPY due to strong trade ties, influencing the Australian dollar.

The AUD/JPY cross has recently attracted sellers during the Asian trading session, particularly on a Tuesday, exhibiting an uptick in movement. The pair experienced an overnight bounce within the range of 103.60 to 103.55, indicating some volatility. Despite hitting a multi-day low, spot prices remain defensive, with the current trade hovering just above the 104.00 mark. This positioning suggests a cautious market sentiment, balancing potential declines and modest gains.

RBA Maintains 4.35% Rate, Inflation Concerns Persist

The Reserve Bank of Australia (RBA) has maintained its official cash rate (OCR) at 4.35% for the fifth consecutive meeting in June. This hawkish stance underscores the RBA’s concerns about persistent inflation, keeping the possibility of future rate hikes on the table. The decision to leave the OCR unchanged reflects the central bank’s cautious approach, aiming to manage inflationary pressures without stifling economic growth. Market participants are closely watching for any signs of policy shifts that could influence the AUD’s performance.

Impact of China’s Economic Data on AUD/JPY

China’s economic recovery, described as bumpy, plays a significant role in the AUD/JPY dynamics due to China’s status as the second-largest economy. The uncertain recovery in China overshadows the RBA’s interest rate narrative. This is because economic data from China significantly impacts antipodean currencies, given the close trade ties between the two countries; weaker Chinese economic performance tends to undermine the Australian dollar.

Possible BoJ Interventions to Support Yen in July

Remarks from BoJ Governor Ueda sparked speculation of a possible July rate hike, pending upcoming economic data. Additionally, there are speculations regarding possible interventions to support the domestic currency, reflecting the BoJ’s strategic considerations to prop up the yen. These factors collectively contribute to the Japanese yen‘s performance, influencing the broader currency market dynamics.

Upcoming RBA Press Conference Key for AUD/JPY

The current market tone is generally positive, which reduces the demand for the safe-haven Japanese yen and supports the risk-sensitive Australian dollar. This sentiment is critical for the AUD/JPY cross, as it determines the broader market movements and investor behaviour. The upcoming press conference by RBA Governor Michele Bullock, scheduled at 05:30 GMT, is highly anticipated. This event could provide further insights into the RBA’s policy direction and impact on the AUD/JPY cross.

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