During the European session on Wednesday, AUD/JPY sustained its upward trajectory, hovering around 103.70, buoyed by improved risk appetite sentiments.
The latest Australian Budget for 2024-25, revealed a return to deficit after the prior year’s surplus of $9.3 billion in 2023-24. The Australian government has embarked on a multifaceted approach to address headline inflation concerns and alleviate cost-of-living pressures. Billions have been allocated towards initiatives aimed at reducing energy bills and rent, alongside endeavors to lower income taxes.
In tandem, the Australian Bureau of Statistics unveiled the Wage Price Index (Q1) on Wednesday, indicating a 0.8% increase in the first quarter, slightly below the projected 0.9% surge. Year-on-year figures reflected a 4.1% uptick, marginally lower than the anticipated 4.2% rise.
Turning to Japan, Finance Minister Shunichi Suzuki emphasized the government’s collaboration with the Bank of Japan (BoJ) to ensure policy alignment concerning foreign exchange. Suzuki underscored the implementation of all feasible measures to closely monitor Japanese Yen movements.
Meanwhile, Japan’s 10-year government bond yield maintained stability at approximately 0.95%, reaching its highest level in over six months. This development coincided with the BoJ’s reduction in Japanese government bond purchases this week, marking the first such adjustment since the cessation of its negative interest rate policy in March.
The interest rate disparity between Japan and other major economies has incentivized investors to leverage the Japanese Yen (JPY) for investments in higher-yielding currencies, contributing to the depreciation of the JPY.
