During the European session on Thursday, the AUD/JPY pair continued its upward trajectory for the second consecutive day, hovering around 103.90. The surge in AUD/JPY was underpinned by upbeat Australian Trade Balance figures, with the trade surplus widening to A$6,548 million ($4,321.68 million) month-over-month in May. This figure surpassed market expectations of A$5,500 million and outpaced April’s surplus of A$5,024 million. The positive momentum was fueled by a 7.2% month-over-month decline in imports, reversing April’s 4.2% increase, coupled with a 2.5% contraction in exports following a previous decline of 0.6%.
Bolstering the Australian Dollar‘s outlook, Reserve Bank of Australia (RBA) Governor Michele Bullock delivered a hawkish statement on Wednesday. Bullock signaled the central bank‘s readiness to consider raising interest rates should the Consumer Price Index (CPI) fail to return to the target range of 1%-3%. Additionally, Bullock acknowledged the easing trend in the labor market across various metrics, as reported by NCA NewsWire.
On the Japanese Yen front, the benchmark 10-year Japan bond yield dipped below 1% for the first time in two weeks. Bank of Japan (BoJ) Governor Kazuo Ueda, speaking to parliament on Thursday, remarked that while inflation expectations are gradually climbing, they have yet to attain the 2% target. Ueda emphasized the ongoing scrutiny of market developments since the March decision and advocated for a reduction in bond purchases as the central bank progresses in unwinding its massive monetary stimulus.
BoJ board member Toyoaki Nakamura echoed Ueda’s sentiments, suggesting the maintenance of current policy settings for the foreseeable future. Nakamura underscored the weakness in households’ purchasing power and stressed the importance of a substantial rise in disposable income to stimulate spending.
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