The AUD/JPY currency pair continues to trade in negative territory, hovering around 97.90 for the third consecutive day during Asian trading hours on Thursday. Despite recent positive Australian Purchasing Managers Index (PMI) data, the Australian dollar (AUD) remains subdued. Market participants are now awaiting comments from Bank of Japan (BoJ) Governor Kazuo Ueda on Friday for potential market-moving insights.
Data released on Thursday by Judo Bank and S&P Global revealed an improvement in Australia’s PMI figures. The preliminary Judo Bank Manufacturing PMI increased to 48.7 in August from 47.5 in July. The Services PMI rose to 52.2, up from 50.4 the previous month, while the Composite PMI advanced to 51.4 from 49.9.
The Australian dollar’s downside may be cushioned by the Reserve Bank of Australia‘s (RBA) hawkish stance. The RBA has indicated that the cash rate is likely to remain stable for an extended period, with a rate cut appearing improbable in the near future.
Conversely, expectations of further interest rate hikes by the Bank of Japan (BoJ) are supporting the Japanese yen (JPY) against the AUD. A Reuters poll from Wednesday revealed that most economists anticipate the BoJ will raise rates again by the end of the year, with a median forecast of a 25 basis point increase to 0.50%.
DBS Senior FX Strategist Philip Wee highlighted that Japan’s parliament will convene on August 23 to discuss the BoJ’s monetary policy decisions made on July 31. Wee suggested that BoJ Governor Kazuo Ueda is expected to maintain the plan to raise rates if the median forecasts are met or exceeded.
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