During the European session on Thursday, AUD/JPY continued its upward trajectory, hovering around 102.50. However, the prospect of intervention from Japanese authorities looms, potentially curbing further gains in the AUD/JPY cross.
The surge in Japan’s 10-year government bond yield to approximately 0.9%, nearing six-month highs, follows the Bank of Japan‘s (BoJ) April policy meeting summary. At the meeting, the board acknowledged upward inflation risks and discussed potential scenarios warranting additional interest rate hikes. BoJ Governor Kazuo Ueda’s recent indications of multiple rate increases in the coming months have underscored this sentiment.
On the Australian front, the first quarter of 2024 witnessed a 0.4% decline in Australian Retail Sales (QoQ), marking a reversal from the 0.4% growth observed in the fourth quarter of 2023.
Challenges for the Australian Dollar (AUD) persist amidst the Reserve Bank of Australia (RBA)’s less hawkish stance. Despite the Monthly Consumer Price Index (YoY) for March surging to 3.5%, exceeding expectations of 3.4%, the RBA remains cautious.
RBA Governor Michele Bullock highlighted a recent pause in inflation control progress, advocating for vigilance regarding inflation risks. Bullock maintains that current interest rates are appropriately positioned to guide inflation back within the target range of 2-3% by the second half of 2025 and to the midpoint by 2026.
